Markets Rebound Strongly on Value Buying
4:11 pm Monday, August 16th, 2021
Stocks extended a rally from their March 2020 low to 100%, erasing losses that were driven by concern the global economic recovery is faltering. Treasuries rose.
The weak start was largely pinned to several negative-sounding developments, which presumably prompted some profit-taking after a series of record closes for the S&P 500 and Dow. There was, and still is, a sense that the market is due for a pullback.
Briefly, China reported softer-than-expected retail sales, fixed-asset investment, and industrial production data for July; the Empire State Manufacturing for August was weaker than expected; Afghanistan was overtaken by the Taliban; and CNBC suggested that the Fed could begin tapering as soon as October — all the while the Delta variant continues to spread in the U.S.
As of now, the market is doing what it’s done best all year, and that’s resisting selling pressure. There is a bit of a defensive mindset, with Apple (AAPL) traded higher along with the S&P 500 utilities (+0.9%), health care (+0.5%), consumer staples (+0.5%), and real estate (+0.1%) sectors.
Conversely, the energy sector (-1.9%) is down the most with a 2% decline, followed by influential losses in the consumer discretionary (-1.2%) and communication services (-0.7%) sectors. The consumer discretionary sector is being held down by weaknesses in Amazon.com (AMZN) and Tesla (TSLA).
Oil prices, which were down 4% earlier today, have recovered some losses after OPEC+ rejected calls from the U.S. to speed up oil production, according to Reuters. The 10-yr yield, meanwhile, is still trading near session lows at 1.25%, or five basis points below Friday’s settlement.
Hedging interest has eased with the rebound attempt in the market. The CBOE Volatility Index is up just 1.2 points, or 7.9%, to 16.67 after touching 17.71 intraday.
