Stocks End Higher On Value Buying
3:09 pm Monday, May 16th, 2022
As expected, the heavily-weighted information technology (-0.9%) and consumer discretionary (-2.0%) sectors are today’s worst-performing sectors, featuring influential declines in Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), and Tesla (TSLA).
More broadly, the Russell 3000 Growth Index is down 0.9%, whereas the Russell 3000 Value Index (+0.03%) is up fractionally.
On the upside, the energy (+2.6%), health care (+0.4%), consumer staples (+0.3%), and utilities (+0.2%) sectors are outperforming in positive territory, with energy stocks rising in tandem with oil prices.
Oil prices appear to be keying off the potential for increased demand from China on news that Shanghai will phase-in reopening of businesses. Elevated oil prices, though, have contributed to underlying growth concerns (as higher fuel costs eat into discretionary spending), which have been reinforced by a multitude of factors today.
Namely, weaker-than-expected Chinese data for April, a negative print for the Empire State Manufacturing Survey for May, a downwardly revised 2022 eurozone growth forecast from the European Commission, and a temporary wheat export ban from India that has driven wheat futures higher ($12.48/bu, +0.70, +5.9%).
The Treasury market is telegraphing these growth concerns, as demand for longer-dated maturities pushes yields lower. The 10-yr yield, which is sensitive to economic growth expectations, is currently down six basis points to 2.87%. The U.S. Dollar Index is down 0.2% to 104.36.
It’s worth noting that there isn’t a rush for downside protection, evidenced by the decline in the CBOE Volatility Index (28.16, -0.71, -2.5%), which could be a testament to the S&P 500 having an okay performance despite the weakness in the growth stocks. In other words, the broader market has preserved most of last Friday’s rally and not sold into strength, giving investors some hope moving forward.
Today’s economic data was limited to the Empire State Manufacturing Survey for May, which dropped to -11.6 (consensus 15.0) from 24.6 in April.
