Stocks See Continuous Buying: Posts Big Weekly Gains
4:02 pm Friday, March 18th, 2022
Major U.S. stock indexes were headed for their best week since November 2020 as oil prices stayed below recent highs and investors embraced signs from the Federal Reserve of confidence in the U.S. economy.
Starting with geopolitics, hopes for a Russia-Ukraine ceasefire agreement have been tempered while Chinese state media relayed stubborn-minded rhetoric out of President Xi’s phone conversation with President Biden. Crude futures remain elevated above $100.00 per barrel ($102.84, +1.19, +1.2%).
In turn, money might be flowing into the mega-caps on the view that they still offer some protection for investors (with more reasonable valuations) in these volatile conditions driven by geopolitical uncertainty.
The S&P 500 information technology (+1.3%), consumer discretionary (+1.0%), and communication services (+0.8%) sectors are the only sectors trading higher amid the mega-cap gains, while the utilities sector (-0.9%) underperforms with a 0.9% decline.
The outperformance of the mega-caps is better shown in the 1.3% gain in the Vanguard Mega Cap Growth ETF, versus the 0.1% decline for the Invesco S&P 500 Equal Weight ETF.
The broader market is slowing down from recent gains, but there appears to be a technical factor in play, too. The S&P 500 is currently retesting its 50-day moving average (4432). Moving past the key technical level could give credence to the rebound effort and foster additional gains. This will be a key level to watch.
Separately, FedEx (FDX) and U.S. Steel (X) are struggling after providing underwhelming earnings news. FedEx missed EPS estimates on above-consensus revenue and reaffirmed its full-year EPS guidance while U.S. Steel issued downside Q1 EPS guidance.
Existing home sales decreased 7.2% in February to a seasonally adjusted annual rate of 6.02 million (consensus 6.20 million). Total sales in February were down 2.4% from a year ago.
