Both the Dow and S&P 500 closed well off their respective lows, each losing 0.70%. Higher dividend yielding names continued to come under pressure as staples, telecom, utilities, and pharma stocks were aggressively sold. REIT’s and homebuilders also sold off. Financials were a leading area again. If interest rates continue to move higher banks will see their net interest margins expand.
Commodities were led by precious metals and grains. Gold closed higher by 0.91% and silver was higher by 0.65%. Crude was sharply lower trading off 1.95%.
Banks and brokers worked higher as they will be one of the areas that benefits from higher rates. The CEO of Citigroup spoke at a conference today. He reiterated earnings guidance and said that capital markets businesses will see better performance for the rest of the year.
Semiconductors gained close to 0.50% on the day. Intel traded up 0.79%. The move higher in semi’s was broad based. Semiconductor equipment makers did not perform as well. Telecom equipment makers performed well also. Cisco’s earnings continue to have a positive impact on the space and they traded higher ahead of earnings from Ciena.
There was profit taking in the homebuilding space. There are mixed signals influencing the area. The companies are saying business is picking up dramatically. But, interest rates are moving higher. Lumber stocks have recently peaked and sold off sharply over the past week. That area came under intense pressure today and selling in lumber related names intensified during the day.
Transports traded in line with the tape. Airlines were the weakest area of the sector. There was little news associated with the airlines today. There was simply profit taking in a hot area. Rails rallied midday and faltered into the tape.
Energy was mostly flat on the day. Some influential analysts raised their target allocation in the energy sector today. Crude was off sharply losing 1.75%. Oxy Petroleum traded up over 2% on speculation regarding the breakup value of the company.
Consumer staples were hammered today, losing 1.9%. The tried and true high dividend payers saw distribution today. In light of higher interest rates investors do not find their yields quite so attractive. Staples were sources of funds used to buy more cyclically oriented names today.
Source: PFS Group
