Stocks Edged Lower On Profit Taking
4:10 pm Thursday, July 15th, 2021
U.S. stocks ticked down Thursday after commentary from the Federal Reserve’s chief on the outlook for the economy and monetary policy.
The S&P 500 had wavered in negative territory all day and closed lower. There was influential weakness in the mega-cap domain, but there were pockets of strength in value/cyclical sectors that have given the session some redeeming qualities.
The motive appears to be profit-taking interest, even as the 10-yr yield trades lower by four basis points to 1.32%. To be fair, NVDA seems to be seeing greater selling interest because of the EPS miss from Taiwan Semi (TSM).
The S&P 500 information technology (-0.8%), communication services (-0.5%), and consumer discretionary (-0.7%) sectors are lagging due to those mega-cap losses, while the financials (+0.5%), industrials (+0.2%), materials (+0.2%), and utilities (+0.6%) sectors are trading higher.
Peak growth concerns shouldn’t get all the blame today because while long-term rates seem to fit the bill, copper prices are showing strength and many cyclical stocks are trading higher. Economic data was also largely mixed.
Honeywell (HON), Morgan Stanley (MS), and Delta Air Lines (DAL) are a few of the cyclical standouts. Honeywell will join the Nasdaq 100 on July 21. Morgan Stanley beat top and bottom-line estimates. Delta was double-upgraded to Strong Buy from Market Perform at Raymond James.
Separately, the second day of Fed Chair Powel’s semiannual monetary policy testimony provided no surprises just like the first day.
Initial jobless claims for the week ending July 10 decreased by 26,000 to 360,000 (consensus 360,000) — the lowest level since March 14, 2020. Continuing claims for the week ending July 3 fell by 126,000 to 3.241 million — the lowest level since March 21, 2020.
