The S&P 500 gained 0.42% and the Dow was higher by 0.16%. Investors entered September nervous after the pullback in August. Continued concerns over the situation in Syria, Fed tapering and the debt ceiling caused some intraday volatility today. The S&P was up more than 1% at its highs today then hit flatline at mid-day. Comments regarding potential action against Syria were the catalyst for the selloff in the late morning.
Several announced M&A deals and strong global macro numbers set a positive tone to the early trading. In the morning session cyclical stocks clearly outperformed while safer haven issues were laggards. Telecom stocks traded lower after it was announced that Verizon was purchasing Vodafone’s 45% stake in Verizon Wireless for $130 billion. Microsoft sold off sharply after it was announced they were buying Nokia’s cellular phone business. Semiconductors rallied after it was reported that industry sales for August were better than expected. Retail stocks traded higher after better than expected U.S. ISM data was announced.
Materials traded higher, led by steel stocks as better than expected data from China was released over the weekend. Commodities were mostly higher, with precious metals, copper, crude, and natural gas trading ahead of the tape.
Financials outperformed the tape posting a gain on 0.70%. The bank index lagged the overall sector. Large money center banks and trusts outperformed regional banks. Brokers were extremely strong. There were rumors of consolidation in brokerage firms and some were looking to sell off some of their market making operations to larger competitors.
Microsoft weighted down the tech sector. MSFT fell 4.6% on the Nokia deal and an article in the Wall Street Journal suggested that Ballmer’s replacement will not lead a major change. Industry sales data released for August concerning semiconductors was favorable. Also, some companies in the sector have made positive comments regarding third quarter sales trends.
A positive article in Barron’s and better than expected news from China helped the industrial sector. The beginnings of an orderly recovery in Europe and China will be needed to see continued moves higher in the sector.
CBS rallied after it was announced they reached a carriage agreement with Time Warner Cable. Pure-play cable companies rallied after better than expected ratings for live-programming this summer were released. Ad Agencies were higher after some companies talked about potential merging agencies. Internet stocks were led by a strong move from leader Amazon. Amazon was bolstered by the strong ISM And PMI numbers.
Healthcare outperformed the broad market averages as biotech and managed care stocks rallied. Continued weakness in major pharma stocks hurt the space. The largest names in the biotech group were all up over 1.5%.
Consumer discretionary outperformed staples. The stronger macro numbers helped the more cyclically oriented discretionary names. Casual dining names were particularly strong.
Source: PFS Group
