Stocks Extend Gain As Growth Stocks Attract Buyers

2:59 pm Monday, August 15th, 2022

The S&P 500 turned positive Monday, as consumer and tech rebounded to offset falling energy stocks amid fresh concerns about global growth.

A sharp decline in the August Empire State Manufacturing Index and a lower-than-expected August NAHB Housing Market Index reading further fueled the early selling efforts. The market found upside momentum midmorning, led by the mega caps, and continues a steady climb with the Dow Jones Industrial Average trading above its 200-day moving average (33,896.89).

The global growth concerns in play today are sending oil prices lower with WTI crude oil futures down 3.6% to $88.89/bbl. Unleaded gasoline futures are down 3.7% to $2.93/gal. At the same time, the S&P 500 energy sector sits firmly in last place, down 1.8%, as the only sector to move more than 1.0% in either direction.

Aside from energy and materials (-0.2%), the midmorning rally has lifted every S&P 500 sector into positive territory. Consumer staples (+0.9%), consumer discretionary (+0.6%), information technology (+0.5%), and communication services (+0.5%) are at the top of the leaderboard. The top sectors are mostly boosted by their mega cap components. The Vanguard Mega Cap Growth ETF (MGK) is up 0.7% versus a 0.2% gain in the Invesco S&P 500 Equal Weight ETF (RSP) and a 0.4% gain in the S&P 500.

Consumer discretionary outperforms thanks to Tesla (TSLA) despite gains being held back by its homebuilder components, which sold off on the NAHB Housing Market Index release. D.R. Horton (DHI) and Pultegroup (PHM) are down today after NAHB Chief Economist Robert Dietz said, “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” according to CBNC.

The communication services sector is getting a boost from Dow component Disney (DIS) after CNBC reported Third Point took a new position in the company. Meta Platforms (META) and Alphabet (GOOG) are also boosting sector performance.

Separately, the 2-yr note yield is down eight basis points to 3.17% while the 10-yr note yield is down seven basis points to 2.78%.