Stocks Pulled Back After Consumer Sentiment Data
4:09 pm Friday, July 16th, 2021
The S&P 500 slipped as fresh data showed that consumer sentiment dwindled in early July, driven in part by concerns over high inflation.
There’s a split between cyclical and counter-cyclical stocks, extending a trend from the past few days. The energy (-1.6%), materials (-1.0%), financials (-0.8%), and consumer discretionary (-0.7%) sectors represent the cyclical laggards, while utilities (+1.1%), real estate (+0.8%), health care (+0.5%), and consumer staples (+0.2%) represent the defensive winners.
This differs from the opening tick when most stocks opened higher, including cyclical stocks and small-caps, following a better-than-expected retail sales report for June. Total retail sales increased 0.6% m/m (Briefing.com consensus -0.6%) while sales, excluding autos, rose 1.3% m/m (Briefing.com consensus +0.3%).
The market faded the positive start alongside an influential turnaround in the information technology sector (-0.3%), which was up as much as 0.7%; a retracement in Treasury yields; and preliminary data showing consumer sentiment decline month-over-month in July.
Regarding Treasuries, the 10-yr yield touched 1.34% after the retail sales report, but it’s now trading at 1.31%, or one basis point above yesterday’s settlement. This has kept a lid on any rebound attempt in the financials sector while conversely aiding the real estate and utilities sectors — both of which have dividend yields higher than the 10-yr yield.
Looking at individual names, Charles Schwab (SCHW) is struggling following its mixed earnings report while Dow Inc. (DOW) faces additional selling interest after the stock was downgraded to Underperform from Neutral at BofA Securities.
Moderna (MRNA), on the other hand, stands out with an 8% gain on news it will join the S&P 500 prior to the open on July 21.
