Before The Bell
The stock market delivered a mixed performance yesterday. The session started positively, and the indices moved upward after the Case Shiller Home Price Index showed that U.S. home prices were up 18.4% year over year. The S&P 500 reached its 69th record high this year, while the Dow Jones Industrial Average and NASDAQ were also within 1% of their all-time highs. However, this momentum petered out in the second half of the day, as the daily count of coronavirus cases reached a high of its own, and the indices retreated. Overall, the S&P closed down 5 points, while the NASDAQ fell 90 points. The Dow, however, kept more of its positive price action than the others and rose by 96 points.
Market breadth was relatively even as decliners outpaced advancers by a 1.1-to-1.0 ratio. Utility stocks were among the best performers of the day as investors moved into such safe-haven issues. Meantime, technology equities were among the worst performers.
In commodity news, oil prices rose yesterday as traders bet on a further mismatch between supply and demand. The American Petroleum Institute also estimated a large 3.09 million barrel inventory drawdown.
U.S. Treasury bond yields were a mixed bag, as short-term rates rose a bit due to higher inflation expectations, while long-term rates fell. This combination usually hurts the earnings of financial companies, which borrow short and lend long.
The VIX Volatility Index fell slightly yesterday, as demand for options protection fell, which suggests lower expected price volatility in the trading periods ahead. Looking to today’s session, the major equity futures are mixed, suggesting a neutral start to the trading day.
Fewer economic reports will be released as the year reaches its conclusion, with initial jobless claims and the Chicago Purchasing Manager Index on the docket for Thursday. Meanwhile, only a handful of companies will report earnings results before the ball drops. As such, we think most traders will be looking at how the coronavirus pandemic unfolds and at any signs of inflation to guide their strategy in the days ahead.
– John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
