Closing Stock Market SummaryThe S&P 500 advanced 1.8% on Election Day, as investors bought the dip for the second straight day ahead of tonight's results. The Nasdaq Composite (+1.9%) and Dow Jones Industrial Average (+2.1%) eked out larger gains while the Russell 2000 (+2.9%) legged out the clear advantage.
Ten of the 11 S&P 500 sectors finished in positive territory with each rising more than 1.0%. The industrials (+2.9%), financials (+2.2%), and consumer discretionary (+2.0%) sectors increased at least 2.0%; the energy sector (-0.8%) was the only sector that closed lower despite higher oil prices ($37.62, +0.83, +2.3%).
While there was no specific catalyst today, the gains might have been aided by an acknowledgement that the market was still oversold on a short-term basis. In addition, there was a sense of optimism that an election outcome could be projected tonight or by tomorrow morning (or perhaps some relief that it's almost over).
The positive price action also contributed to continued selling in longer-dated Treasuries, which steepened the curve in a trade that benefited the financials sector. The 2-yr yield was unchanged at 0.16%, while the 10-yr yield increased three basis points to 0.88% to close at its highest level since June 8. The U.S. Dollar Index fell 0.7% to 93.51.
In the tech space, PayPal (PYPL 179.81, -7.95, -4.2%) and Skyworks (SWKS 138.80, -3.32, -2.3%) were notable laggards despite exceeding earnings expectations. PayPal, however, did issue downside Q4 EPS guidance. Arista Networks (ANET 249.49, +33.37, +15.4%) surged 15% following its upbeat earnings results and guidance.
Interestingly, the S&P 500 came within 12 points of its 50-day moving average (3400) shortly before the close. The catalyst that could propel the benchmark index above the key technical level is, of course, the election. As an aside, trading volume was comparable to previous sessions.
Reviewing Tuesday's economic data:
- Factory orders for manufactured goods increased 1.1% m/m in September, as expected, following a downwardly revised 0.6% increase (from 0.7%) in August. This is the fifth straight monthly increase in factory orders.
- The key takeaway from the report is the affirmation that business spending continued to increase in September, evidenced by a 1.0% increase in new orders for nondefense capital goods excluding aircraft, versus a 2.4% increase in August.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for October, the ADP Employment Change Report for October, the Trade Balance Report for September, and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +24.4% YTD
- S&P 500 +4.3% YTD
- Dow Jones Industrial Average -3.7% YTD
- Russell 2000 -3.3% YTD