Stocks Closed Higher After Early Fall
4:05 pm Monday, October 18th, 2021
The S&P 500 closed with marginal gains after being down 0.5% shortly after the open. The resilient price action has coincided with oil prices and Treasury yields backing down from session highs, with the latter event helping drive the mega-caps higher.
Ten of the 11 S&P 500 sectors were trading lower, but now eight sectors are trading higher. The consumer discretionary (+0.8%), energy (+0.5%), and information technology (+0.4%) sectors outperform, while health care (-0.6%), utilities (-0.6%), and consumer staples (-0.7%) trade lower.
The negative start was attributed to softer-than-expected Chinese data (Q3 GDP, industrial production, and fixed asset investment), a 1.3% m/m decline in U.S. industrial production for September (consensus +0.2%), crude futures rising past $83.00/bbl, and the 10-yr yield hitting 1.64%.
Oil prices (81.65/bbl, -0.08, -0.1%) have since turned negative, and the 10-yr yield is trading back at 1.60%, or two basis points above last Friday’s settlement.
Notwithstanding the resilient price action, there doesn’t seem to be a lot of conviction in the market right now. Investors might be waiting for the plethora of Q3 earnings news coming this week. On a related note, State Street (STT), which beat EPS estimates today, is trading at a 52-week high.
Separately, Walt Disney (DIS) was struggling with a 3% decline after the stock was downgraded to Equal Weight from Overweight at Barclays. Netflix (NFLX) was up 1.0%.
Total industrial production decreased 1.3% in September (consensus +0.2%) following a downwardly revised 0.1% decline in August (from +0.4%). The capacity utilization rate dropped to 75.2% (consensus 76.5%) from a downwardly revised 76.2% in August (from 76.4%).
