Today’s trade is decidedly positive, building on recent gains. Treasury yields took a noticeable turn lower, setting the stage for the stock market to rally. The 10-yr note yield is down 14 basis points to 4.09% and the 2-yr note yield is down four basis points to 4.44%. The S&P 500 is comfortably above the 3,800 level after dipping below 3,500 on October 13.
The Treasury market reacted favorably to some weak-looking home price data for August that was contained in the FHFA Housing Price Index (-0.7% m/m) and the S&P Case-Shiller 20-City Composite Index (+13.1% yr/yr, but down from +16.0% yr/yr in July).
Those reports supported market participants’ growing belief that the Fed may soften its approach after the November meeting.
Another factor fueling today’s rally is favorably quarterly results from names like Coca-Cola (KO), General Motors (GM), UPS (UPS), and Sherwin-Williams (SHW).
Mega cap stocks are also boosting the broader market ahead of earnings reports from Alphabet (GOOG) and Microsoft (MSFT) after today’s close. The Vanguard Mega Cap Growth ETF (MGK) is up 1.8% versus a 1.2% gain in the S&P 500.
Market breadth reflects the broad nature of today’s gains. Advancers lead decliners by a greater than 5-to-1 margin at the NYSE and a nearly 4-to-1 margin at the Nasdaq.
Ten of the 11 S&P 500 sectors trade in positive territory led by real estate (+3.3%). Meanwhile, energy (-0.4%) is the lone holdout in the red despite rising oil prices. WTI crude oil futures are up 1.0% to $85.39/bbl.