US Stock Soar On Bargain Hunting, Tech Lead
4:28 pm Monday, May 24th, 2021
The S&P 500 advanced 1.0% on Monday, thanks in large part to the heavily-weighted growth stocks. The Nasdaq Composite outperformed with a 1.4% gain while the Dow Jones Industrial Average and Russell 2000 both increased 0.5%.
The positive bias wasn’t catalyzed by any specific news, suggesting that investors are adopting a buy-the-dip mindset after a tough three weeks for the growth stocks. Granted, the 10-yr yield is down three basis points to 1.60%, which has been a supportive factor.
Ten of the 11 S&P 500 sectors finished in positive territory, and none were more influential to today’s performance than the information technology (+1.8%), communication services (+1.8%), and consumer discretionary (+1.0%) sectors due to their mega-cap components. The Vanguard Mega Cap Growth ETF (MGK 217.71, +3.41) gained 1.6%.
Given the lack of market-moving macro news, the positive price action from the start presumably fueled a fear of missing out on further rebound gains, particularly in the growth stocks. To be fair, the 10-yr yield decreased two basis points to 1.61%, which was viewed as a supportive factor.
The tech sector was drawing support from most of its components, including Apple (AAPL), Microsoft (MSFT), and the semiconductor stocks. The Philadelphia Semiconductor Index is up 2.4%. The more speculative growth stocks are also doing well, represented here by 2.3% gain in the ARK Innovation ETF (ARKK).
Either way, investor sentiment is still feeling good right now given the broad-based gains, and hedging interest has decreased accordingly. The CBOE Volatility Index (19.05, -1.10, -5.5%) has slipped back below the 20.00 level.
Interestingly, though, the S&P 500 has found resistance at the 4200 level. It’s been hovering below this level for more than two hours.
U.S. Treasuries began the week on a higher note with longer tenors pacing a quiet Monday advance that lacked the participation of some European investors due to a holiday. Treasuries recorded roughly half of their gains at the open, followed by some backtracking during the first hour of action. The shallow pullback was most visible in shorter tenors while the long bond essentially held its ground.
