Stock Closed Lower On Profit Booking
4:14 pm Monday, August 02nd, 2021
Stocks closed lower after gaining momentum in the first half on Monday as $1 TRIL infrastructure bill and strong second-quarter corporate earnings lifted sentiment ahead of a deluge of macroeconomic data this week.
Likewise, most sectors closed off their early highs, with materials (-0.6%), consumer staples (-0.2%), communication services (-0.1%), and industrials (-0.1%) slipping into negative territory. The utilities (+0.9%), consumer discretionary (+0.6%), and health care (+0.4%) sectors outperform in the green.
The positive start was attributed to new inflows on the first trading day of the month, infrastructure optimism after the Senate finalized the full text of the $1 trillion bipartisan bill, mixed but expansionary manufacturing PMIs for July out of Asia and Europe, and Square (SQ) announcing a $29 billion all-stock deal for Afterpay.
Follow-through buying has been hard to come by, though, after the July ISM Manufacturing Index and June construction spending reports missed expectations. Regarding the ISM Manufacturing report, the index decelerated to 59.5% (consensus 60.7%) from 60.6% in June while the Prices Index of the report decreased to 85.7% from 92.1%.
The economic data has once again played into the belief that growth rates and inflation rates are peaking, which is likely driving some of the rally in longer-dated Treasuries. The 2-yr yield is down just one basis point to 0.17%, anchored by the Fed’s monetary policy stance.
Separately, Tesla (TSLA), Pfizer (PFE), and ON Semiconductor (ON) were some other story stocks besides Square that are providing some support for the market.
TSLA was initiated with an Outperform rating at KGI Securities. Pfizer could reportedly have its COVID-19 vaccine fully approved by the FDA as soon as next month. ON Semiconductor provided positive earnings results and upbeat guidance, and the news is tricking over to the Philadelphia Semiconductor Index (+1.2%).
