Stock Extends Rally On Value Buying
4:10 pm Wednesday, July 21st, 2021
The stock market extended yesterday’s rebound rally, largely due to easing concerns about the Delta variant’s potential impact on the economy.
Prior to the open, the CEOs of Coca-Cola (KO), Chipotle Mexican Grill (CMG), and United Airlines (UAL) said they haven’t seen any impact to their businesses related to Delta Covid variant, which suggests consumer behavior has remained resilient in part because of the efficacy of vaccines.
On top of that, each of these companies beat EPS estimates along with Johnson & Johnson (JNJ) and Verizon (VZ). KO, JNJ, and VZ also provided upbeat FY21 EPS guidance.
These easing Delta fears have been further illustrated by the 10-yr yield trading higher by eight basis points to 1.29% and crude oil prices trading higher by 4.6% to $70.31/bbl. The S&P 500 financials (+1.9%) and energy (+3.8%) sectors have really keyed off the higher rates and oil prices.
The materials (+1.0%) and industrials (+0.9%) sectors follow suit with more modest gains in comparison.
Conversely, the defensive-oriented utilities (-0.4%), health care (-0.1%), and consumer staples (-0.1%) sectors are struggling to attract buying interest as they hold onto modest losses. Netflix (NFLX) was an individual laggard after missing EPS estimates and providing underwhelming subscriber guidance for the third quarter.
Separately, the results of the $24 billion 20-yr Treasury bond auction will be released shortly at 1:00 p.m. ET.
Reviewing today’s economic data, the weekly MBA Mortgage Applications Index decreased 4.0% following a 16.0% spike in the prior week. The EIA reported its first weekly inventory build (2.11 mln barrels) in nine weeks.
