Monday, August 16, 2021 – DIA 3566.18 +.33, QQQ 369.98 +.04, SPY 446.97 +.24, IWM 219.07 -.93%
No high-impact data was released. In overnight news, the collapse of the Afghan government over the weekend dominated coverage, followed by news of the COVID-19 Delta variant and lockdowns. The major indexes traded bullishly with down openings followed by closes higher on the day, with one conspicuous exception, small caps, which closed decidedly in the negative. Interest rates were lower, with the 10-year note index (TNX) 12.57 -.40 down. Defensive rotation was clearly in evidence as Healthcare (XLV) 135.21 +1.14% outperformed, with United Healthcare (UNH) 417.21 +1.84% leading the DJIA, followed by Utilities (XLU) 69.10 +.61%. Economically sensitive sectors were lower on the day, Energy (XLE) 48.51 -1.84% was the worst performer with Apache (APA) 17.13 -4.19%, and Diamondback (FANG) 72.54% showing big drops, followed by Basic Materials (XLB) 86.02 -.50% with Freeport McMoRan (FCX) 36.84 -3.31% weak. In foreign large-cap tech NetEase (NTES) 85.34 -4.82%, JD.com (JD) 66.67 -4.757%, and Baidu (BIDU) 146.57 -3.86% continued to slide under regulatory pressure by the Chinese government.
Tuesday, August 17, 2021 – DIA 353.83 -.77%, QQQ 365.73 -.88%, SPY 444.04 -.66%, IWM 216.40 -1.22%
Retail sales reported in much weaker than expected down -1.1% vs. -.3%, Ex-Autos down -.4% v. +.1% expected. It was a down day for the major averages with small caps taking the brunt of the selling. The best performing sector on the day was Healthcare (XLV) 136.81 +1.18% with Moderna (MRNA) 401.86 +7.49% moving higher on news of booster shots being advised for September and a regulatory approval for 12-17-year-olds in the UK to receive vaccinations. As would be expected on the release of poor retail sales numbers, Consumer Discretionary (XLY) 176.43 -2.37% was the worst performer on the day. Home Depot (HD) 320.75 -4.27% was additionally weaker as it announced slower customer transaction volume. Lulu Lemon (LULU) 392.48 -3.67% was down and The Gap (GPS) 26.76 -4.43% as well, which shares were at the bottom of a recent trading range (3rd test). Lowe’s (LOW) 182.26 -5.80%.
Wednesday, August 18, 2021-DIA 350.12 -1.05%, QQQ 362.21 -.96%, SPY 439.18 -1.09%, IWM 214.51 +.87%
Building permits came in slightly better than expected 1.635M v. 1.61M. Housing starts were reported less than expected at 1.534M v. 1.6M. From the start, the major indexes traded quietly in anticipation of the Fed minutes (July meeting) release. There were no surprises. The transcript indicated a willingness to reduce bond purchases starting toward the end of the year. Some observers pointed to a statement by St. Louis Fed President James Bullard appearing to become more “hawkish” for the late-day selling. Consumer Discretionary (XLY) 177.06 +.36% bounced back from the day before to end an overall negative day in the positive, thanks to outstanding earnings beats by two large retailers, Lowe’s (LOW) 199.73 +9.59% and The TJX Companies (TJX) 73.00 +5.57%. Reacting to Covid-19 news and slower economic growth projections, Energy (XLE) 47.01 -2.08% once again came under pressure as WTI crude prices slid -$2.07. Chevron (CVX) 96.70 -2.71% led the DJIA to the downside. Healthcare (XLV) 134.73 -1.52% was also under pressure with Amgen (AMGN) 226.84 -1.89% and Biogen (BIIB) 341.87 -2.26% moving lower (Berkshire was reported to have reduced the shares in a recent filing).
Thursday, August 19, 2021 – DIA 349.48 -.18%, QQQ 363.96 +.48%, SPY 439.86 +.15, IWM 211.94 -1.20%
Jobless Claims were reported better than expected 348K v. 363K expected. The Philadelphia Fed Manufacturing Index was reported weak 19.4 v. 23 expected. The major averages were mixed closing up off the lows of the day. Small caps continued to noticeably underperform. Afghanistan and COVID-19 Delta news continued to dominate headlines. Interest rates declined. The 10-Year index (TNX) 12.42 -.31 moved lower. As a result, the best sector on the day was Information Technology (XLK) 153.76 +.98% Cisco Systems (CSCO) 57.27 +3.84%l led the DJIA. Microsoft (MSFT) 296.77 +2.08% showed outstanding relative strength as it hit another all-time high. Lading the NASDAQ 100, chip software design firm Synopsis (SNPS) 315.99 +8.73% rose to an all-time high as it beat on earnings and revenues. Specialty semi chip maker Nvidia (NVDA) 197.98 +3.98% handily beat on the top and bottom line on its earnings report. The stock was initiated with a buy recommendation by the Benchmark Company and received a downgrade from Hold to Sell by Summit Insights. In retail, Macy’s (M) 21.61 +19.59% blasted higher and hit a 52 week new high after beating earnings expectations close to 5 fold. Bath & Body Works (BBWI) 65.25 +10.49% beat on earnings and rose to match former price highs. With WTI crude prices (63.91 – 1.99%) still under pressure due to slowing growth concerns and continued COVID-19 Delta fears, the Energy Services sector (XLE) 45.79 -2.60% continued to be the weakest sector in the S&P 500. Occidental (OXY) 22.09 -5.80% and Marathon (MRO) 10.68 -4.13% moved lower.
Friday, August 20, 2021 – DIA 351.16 +.66%, QQQ 367.73 +1.04%, SPY 443.36 +.80%, IWM 215.52+1.69%
No high-impact data was released on the day. The major indexes moved solidly higher but failed to recover losses on the week. Technology (XLK) 155.74 +1.29% was the S&P 500 lead sector, with Microsoft (MSFT) 304.36 +2.56 hitting fresh all-time highs. Nvidia (NVDA) 208.16 +5.14% continued its advance post-earnings release. Enterprise platform technology integrator Lumen Technologies (LUMN) 11.83 +4.32% advanced on the day after the shares challenged recent lows. In retail, Ross Stores (ROST) -2.73% beat on earnings but gave conservative guidance for the coming quarter. Semiconductor equipment manufacturers Lam Research (LRCX) 565.97 -1.94% and Applied Materials (AMAT) 127.20 -1.55% traded down on the day. The shares of both companies have demonstrated poor relative strength since peaking in April and now trade under their respective 20 and 50-day moving averages.
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