Stocks Bounce Back, Merck Leads
3:59 pm Friday, October 01st, 2021
Stocks climbed as prospects for a pickup in growth outweighed concern over inflation pressures at a time when the Federal Reserve is getting ready to wind down its pandemic-era stimulus.
Merck (MRK) is influencing the action after announcing positive data for its COVID-19 oral antiviral with immediate plans to seek emergency use authorization from the FDA. In addition, the September ISM Manufacturing Index was better than expected with a reading of 61.1% (Briefing.com consensus 59.5%).
The energy (+2.5%), financials (+1.1%), materials (+1.0%), and industrials (+1.0%) sectors, which are more exposured to economic activity, are among today’s leaders. The communication services sector (+1.2%) also outperforms after Alphabet (GOOG) and Facebook (FB) were initiated with Outperform ratings at RBC Capital Mkts.
The downside to Merck’s news is that it’s undercutting shares of the vaccine makers, which are bringing the health care sector (-0.5%) into negative territory. Pfizer (PFE) and Johnson & Johnson (JNJ) are down modestly, versus the 12% drop in Moderna (MRNA).
There are still some reservations today given the continued uncertainty on the debt ceiling/infrastructure, ongoing supply chain challenges, and the stock market’s volatile nature over the past month.
The Treasury market is reflecting some defensive positioning, as the 10-yr yield trades lower by four basis points to 1.49%. Treasury yields are down despite the better-than-expected ISM manufacturing report and a 30-year high in the core PCE Price Index for August (3.6% yr/yr).
In other corporate news, Zoom Video (ZM) and Five9 (FIVN) terminated their merger agreement, Honeywell (HON) increased its annual dividend by 5% to $3.92/share. and Keurig Dr Pepper (KDP) authorized a share repurchase program of up to $4 billion.
