Stocks End Higher, Techs Lead The Rally
4:08 pm Wednesday, May 26th, 2021
U.S. stocks close out Wednesday’s session with moderate gains as recent comments from Federal Reserve officials eased concerns about runaway inflation and kept bond yields in check.
The stock market is held to modest gains, but the S&P 500 HAD found it difficult to hold a posture above the 4,200 level. The inability to break out from there, coupled with some recent selling interest in the Treasury market that has lifted the 10-yr note yield to 1.58%, has been a catalyst for some of the selling activity over the past hour.
The consumer discretionary sector (+1.2%) WAS a key part of today’s positive bias as it sits atop the S&P 500 sector leader board. Amazon (AMZN) and Tesla (TSLA) were pulling their weight, with Amazon confirming it will purchase Metro Goldwyn Mayer for $8.45 billion.
In addition, retailers have drawn support from better-than-expected earnings reports and/or upbeat guidance from Dick’s Sporting Goods (DKS), Urban Outfitters (URBN), and Abercrombie & Fitch (ANF).
The S&P 500 communication services (+0.8%), real estate (+0.8%), and energy (+0.9%) sectors follow behind with decent gains. On the downside, the health care (-0.5%), materials (-0.3%), and information technology (-0.1%) sectors trade in negative territory.
That point remains debatable, as does the meaning of the stock market’s relatively tepid response to the drop in long-term rates. Some also argue that the drop in rates reflects peak growth concerns which are acting as a headwind for chasing stocks at pricier levels.
Today’s economic data was limited to the weekly MBA Mortgage Applications Index, which decreased 4.2% following a 1.2% increase in the prior week.
Commodities: WTI crude: +0.2% to $66.21/bbl, Gold: +0.2% to $1901.20/ozt, Copper: +0.6% to $4.53/lb
U.S. Treasuries ended Wednesday on a slightly lower note after giving back their equally slight morning gains. The trading day started on a modestly higher note, but the first hour of action saw a brief dip into negative territory. The 5-yr note was at the forefront of the early reversal, but the bulk of the complex made it back into the green during the next hour. The 30-yr bond extended to a fresh high in the late morning while shorter tenors found resistance near their opening highs.
