Stocks Close Mixed, Energy Stocks Lead
4:05 pm Monday, September 27th, 2021
Wall Street began the last week of September and the quarter with investors backing value over growth on Monday as tech shares, hurt by rising Treasury yields, weighed on the broader market.
Positive momentum in energy prices and Treasury yields has underpinned the so-called reopening trade. The S&P 500 energy sector is rallying 3.7%, followed by financials (+1.4%) and materials (+1.1%) with gains over 1.0%.
The speedy move in interest rates, however, has contributed to valuation-oriented weakness in the S&P 500 information technology sector (-1.2%) and the Vanguard Mega Cap Growth ETF (MGK 243.59, -2.92, -1.2%). The health care sector (-1.5%) is down the most, though.
Briefly, the 10-yr yield touched 1.51% after flirting with 1.30% last week. The 10-yr yield is now trading at 1.48%, or two basis points above Friday’s settlement. On a related note, total durable goods orders were up 0.8% m/m in August (Briefing.com consensus 0.6%), but excluding transportation, they were up only 0.2% (Briefing.com consensus +0.6%).
Oil prices ($75.40, +1.42, +1.9%) and natural gas futures ($5.59/MMBtu, +0.39, +7.5%) continue to rise amid reports of fuel shortages in the UK and an energy crunch in China. These events reflect ongoing supply constraints coupled with rising demand.
Morgan Stanley, meanwhile, has turned less bullish on Amazon.com (AMZN) because of rising wages. The firm lowered its price target on the stock to $4100 from $4300.
Separately, the S&P 500 is retesting its 50-day moving average (4442), which might be a level worth watching on a closing basis for sentiment reasons.
The August Durable Goods Orders report was mixed. Total durable goods orders up 1.8% (consensus +0.6%) following an upwardly revised 0.5% increase (from -0.1%) in July. Excluding transportation, orders were up 0.2% (consensus +0.6%) after an upwardly revised 0.8% increase (from 0.7%) in July. On a year-over-year basis, durable goods orders were up 24.7%, while orders, excluding transportation, were up 17.7%.
