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33 min ago
[BRIEFING.COM] The market was headed for its fifth consecutive day of declines, but buyers stepped in about an hour and a half before the bell. The more defensive areas of the market attracted the most interest, but the late-day buying was relatively broad-based. Along with the Dow and S&P, eight of the ten economic sectors finished positively.
Rising interest rates continue to occupy investors' attention. The yield on the benchmark 10-year note remained at a 20-month high, but bonds were trading in somewhat of a holding pattern ahead of Friday's jobs report and in anticipation of Japan's interest rate decision. Subdued trade within the Treasury market appeared to have relieved stock traders, and the fact that the yield curve exited inversion for the first time since late January was a supportive factor. Rate-sensitive areas rebounded and helped the market rise. Ultimately, though, we expect high yields and impending rate hikes to continue to weigh on sentiment and limit gains.
The Energy market was also in today's spotlight. Crude dropped $1.53 per barrel and closed at $60.05. There were two catalysts. First, OPEC decided to leave production quotas unchanged at 28 million barrels per day, which leaves the cartel's output at a 20-year high. Although the decision was not surprising, there had been some speculation that over supply conditions would prompt a production cut. Geopolitical concerns are dictating policy at this point, and the decision served as a reminder that geopolitical tensions have the ability to affect the market. The Energy Department's inventory report further quelled the market's short-term supply concerns. Last week, crude oil inventory rose more than four times as much as had been expected, to 6.76 million barrels. That marked the highest supply level since May of 1999. Gasoline and distillates inventories fell more than anticipated, but were overshadowed by the crude aspect of the report.
For most of the session, the broader market failed to take a bullish cue in the drop in energy prices. Meanwhile, the Energy sector suffered and weighed heavily on the market. Near the end of the day, bargain hunters fully erased the sectors gain and took it 0.1% higher. One area that did appear to benefit from easing energy prices was retail. Coupled with some restaurant stocks, following solid same-restaurant sales from McDonald's (MCD 35.00 +0.36), retailers helped keep the Discretionary sector (+0.1%) on positive turf. Energy prices weren't the only commodities that fell. Metals extended their sharp pullbacks, and took a toll on the Materials sector (-0.7%).
Given the interest rate environment and expectations for a deceleration in growth, the defensive areas of the market outperformed today. Consumer Staples (+1.0%) again led trading from start to close. Drug retailers and household products, two of our favorite industries within the sector, fared best. Healthcare, another area known for its more defensive attributes, rose 0.6%. Biotech was a bright spot after an FDA advisory panel unanimously recommended the return of the potential blockbuster drug Tysabri.
The Tech sector closed on the flat line. Qualcomm (QCOM 49.60 +1.74) lent considerable upward momentum, on the heels of yesterday's guidance and due to some analyst target hikes today, and several tech bellwethers fared well. Significant pressure from semiconductors and semi equipment stocks was an offsetting factor. Among the laggards was Micron, which announced that it will merge with Lexar Media (LEXR 8.83 +1.74). Plaguing tech stocks again today was Google (GOOG 353.88 -10.57). In a filing with the SEC, the company indicated that it discussed growth projections at its analyst meeting that should not be interpreted as guidance. The indication prompted Goldman Sachs to cut its estimates and price target, and it was a cloud over the Nasdaq today.
Separately, Fed Chairman Bernanke spoke in Las Vegas today. The topic was banking, and did involve policy or the economy. His appearance did not affect trade within either the stock or bond markets today. NYSE Adv/Dec 1606/1638...Nasdaq Adv/Dec 1443/1578
DOW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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