Closing Summary: Stocks and Bonds End Near Highs

The stock market ended the midweek session on an upbeat note with the Nasdaq Composite in the lead. The tech-heavy index advanced 1.0%, while the S&P 500 added 0.7% with all ten sectors ending in the green. 

 

Equity indices registered roughly half of their gains at the open with heavily-weighted health care (+1.2%) and technology (+1.1%) providing support from the start. In fact, only one other sector--industrials (+0.8%)--ended ahead of the broader market. 

 

Notably, the health care space was underpinned by biotechnology. The iShares Nasdaq Biotechnology (IBB 257.13, +5.47) surged off its 50-day moving average for a 2.2% gain, registering its best close since late July. In addition to supporting the top-weighted countercyclical sector, biotech helped fuel the Nasdaq rally. 

 

Top-weighted tech components like Apple (AAPL 97.24, +1.27), Facebook (FB 73.77, +0.94), and Google (GOOGL 584.56, +12.44) also provided support to the Nasdaq, while chipmakers followed closely. The PHLX Semiconductor Index added 0.9% to extend its weekly gain to 1.8%. Of the 30 index components, 26 settled higher, while Cree (CREE 44.82, -4.39) tumbled 8.9% following its one-cent beat and below-consensus guidance for the upcoming quarter. 

 

Elsewhere, industrials drew strength from defense contractors, while transport stocks ended in line with the broader market. The PHLX Defense Index rose 1.4% with Raytheon (RTN 93.64, +2.26) leading the way. For its part, the Dow Jones Transportation Average settled higher by 0.7%. 

 

Although every sector finished higher, there were some soft spots present in the market. Retail stocks underperformed throughout the session following a disappointing Retail Sales report for July and worse than expected earnings from Macy's (M 56.47, -3.29). The stock fell 5.5%, while the SPDR S&P Retail ETF (XRT 84.52, -0.54) lost 0.6%. 

 

On the countercyclical side, consumer staples (+0.3%), utilities (+0.2%), and telecom services (+0.1%) all finished near their flat lines, while the aforementioned health care sector provided leadership. 

 

Strikingly, the daylong strength in equities did not lure money out of the Treasury market. The 10-yr note climbed throughout the session, ending near its high. The benchmark yield slipped three basis points to 2.42%. 

 

Participation was below average with fewer than 550 million shares changing hands at the NYSE. 

 

Economic data included Retail Sales, Business Inventories, and the MBA Mortgage Index: 

Retail sales showed no growth in July following an unrevised 0.2% increase in June, while the Briefing.com consensus expected an increase of 0.3% 

Motor vehicle sales weighed down overall consumer demand 

Manufacturers already reported a drop in unit sales for July (16.5 million SAAR from 16.9 million SAAR in June), which translated into a 0.2% decline in sales at motor vehicles and parts dealers. Motor vehicles and parts sales fell 0.3% in June. 

Excluding motor vehicle sales, demand increased 0.1% in July after increasing an unrevised 0.4% in June, while the consensus expected an increase of 0.3% 

Business Inventories increased 0.4% in June after increasing an unrevised 0.5% in May, which was in line with the Briefing.com consensus. 

The weekly MBA Mortgage Index fell 2.7% to follow last week's 1.6% increase 

Tomorrow, weekly initial claims (Briefing.com consensus 305K) and export/import prices for July will be reported at 8:30 ET. 

S&P 500 +5.3% YTD 

Nasdaq Composite +6.2% YTD 

Dow Jones Industrial Average +0.5% YTD 

Russell 2000 -1.9% YTD

 

Thursday, August 14
08:30	USD		Continuing Jobless Claims		2,500K	2,518K
08:30	USD		Import Price Index (MoM)		-0.3%	0.1%
08:30	USD		Initial Jobless Claims		295K	289K
08:30	USD		Jobless Claims 4-Week Avg.			293.50K
09:45	USD		Bloomberg Consumer Confidence			36.2
10:30	USD		Natural Gas Storage		83B	82B
13:00	USD		30-Year Bond Auction			3.369%