Stocks Rebound After The Recent Sell-Off
4:06 pm Wednesday, September 15th, 2021
U.S. stocks ended higher on Wednesday as surging crude prices boosted energy shares and a swath of positive U.S. data suggested inflation has crested and the economic recovery remains robust, prompting a broad rally.
The outperformance of value stocks was being attributed to positive momentum in energy prices; a huge upside surprise in the Empire State Manufacturing Survey for September, which checked in at 34.3 (consensus 18.6); and in-line industrial production data for August (unlike in China, where it missed expectations).
Presently, the S&P 500 energy sector was outclassing everything else with a 3.0% gain amid bullish EIA crude inventory data. WTI crude futures are currently up 3.0% to $72.54/bbl. The financials (+1.0%) and industrials (+1.0%) sectors follow suit with 1% gains, while the consumer discretionary sector (-0.1%) is the lone holdout.
The market has recently pushed to session highs on no specific news, but there could be an element of trying to play a rebound rally given the S&P 500 has respected its 50-day moving average (4431) today and yesterday. This key technical level has been a strong measure of support for the market since last year.
Microsoft (MSFT) was rising alongside the value stocks after approving a new $60 billion share repurchase program and raising its dividend by 11%. Goldman Sachs (GS) bucked the trend after agreeing to acquire GreenSky (GSKY) for $12.11 per share, or about $2.2 billion, in stock.
Separately, Chevron (CVX) was downgraded to Neutral from Overweight at JPMorgan, but its price target of $111 per share still allows for some upside.
The 10-yr yield is currently up three basis points to 1.31% after touching 1.26% right before the industrial production report was released in the morning. The U.S. Dollar Index is down 0.1% to 92.55.
Total industrial production increased 0.4% in August (consensus 0.4%) following a downwardly revised 0.8% increase in July (from 0.9%). The capacity utilization rate increased to 76.4% (consensus 76.3%) from an upwardly revised 76.2% in July (from 76.1%).
