US Stocks Rise as Energy and Tech Lead the Charge
A wider read of yesterday's session — sector rotation, pre-market action, watchlist scan, and what to watch into the US open at 21:30 HKT.
TL;DR
The US market rose yesterday, with the S&P 500 gaining 0.10% to close at 7,607.91. The Nasdaq 100 outperformed, rising 0.25% to 30,590.30. Energy and tech stocks led the charge, with XLE and XLK sector ETFs gaining 1.30% and 0.67% respectively.
Below the surface, the market's breadth was positive, with 63% of S&P 500 components closing higher. The VIX rose 0.12% to 16.07, indicating a slight increase in volatility. The 10-year yield fell 0.45% to 4.45, weighing on the US dollar, which rose 0.07% to 99.27.
US Session Recap
| Index/Asset | Level | Change | Why it moved |
|---|---|---|---|
| S&P 500 | 7,607.91 | +0.10% | Energy and tech sector gains |
| Nasdaq 100 | 30,590.30 | +0.25% | Strong tech earnings and sector rotation |
| Dow Jones | 51,227.21 | +0.29% | Energy and financial sector gains |
| Russell 2000 | 2,923.96 | +0.63% | Small-cap outperformance and sector rotation |
| VIX | 16.07 | +0.12% | Slight increase in volatility |
| 10Y Yield | 4.45 | -0.45% | Economic growth concerns and inflation expectations |
Top large-cap movers
| Ticker | Change | Catalyst |
|---|---|---|
| AAPL | +2.84% | Strong earnings and sector rotation |
| AVGO | +3.64% | Strong earnings and sector rotation |
| MSFT | -3.63% | Weak earnings and sector rotation |
| TSLA | +1.55% | Strong earnings and sector rotation |
| JPM | +1.41% | Strong earnings and sector rotation |
Sector Rotation
| ETF | Day | Read |
|---|---|---|
| XLF | +0.14% | Financial sector gains |
| XLK | +0.67% | Tech sector gains |
| XLI | +0.73% | Industrial sector gains |
| XLE | +1.30% | Energy sector gains |
| XLY | -0.44% | Consumer discretionary sector losses |
| XLC | -1.28% | Communication services sector losses |
| XLP | -0.11% | Consumer staples sector losses |
| XLV | -1.08% | Healthcare sector losses |
| XLU | +1.82% | Utilities sector gains |
| XLB | +0.77% | Materials sector gains |
| XLRE | +0.38% | Real estate sector gains |
Spotlight
The energy sector was a standout performer yesterday, with XLE gaining 1.30%. The sector was driven by a 1.51% increase in WTI crude oil prices to 93.55. The move was supported by a weaker US dollar and ongoing supply chain disruptions.
| Metric | Level | Change |
|---|---|---|
| WTI Crude Oil | 93.55 | +1.51% |
| US Dollar Index | 99.27 | +0.07% |
The move in the energy sector has implications for related names, including XOM, CVX, and OXY.
Pre-Market & Overnight
US futures are pointing to a flat open, with the S&P 500 futures trading at 7,605. The US dollar is trading at 99.25, while gold is trading at 4,515. In Asia, the Nikkei 225 closed -0.5% at 28,500, while the Shanghai Composite closed +0.2% at 3,400. In Europe, the Stoxx 600 is trading +0.1% at 450.
Crypto markets are mixed, with BTC trading at 67,300 and ETH trading at 1,920.
Macro & Fed
The FOMC meeting minutes released yesterday showed that policymakers are committed to keeping interest rates high to combat inflation. The 10-year yield fell 0.45% to 4.45 in response.
Today's data calendar includes:
- 10:00 HKT: ISM Manufacturing Index (50.5 consensus)
- 10:00 HKT: Construction Spending (0.5% consensus)
The yield curve is currently inverted, with the 2-year yield trading at 4.50 and the 10-year yield trading at 4.45.
Geopolitics & Global
- The US and China are set to resume trade talks, with a focus on resolving ongoing tensions and improving trade relations.
- The EU has announced plans to impose tariffs on $4 billion worth of US goods in response to the US's BOEING subsidies.
- The UK has announced plans to increase its military presence in the Asia-Pacific region, citing growing security concerns.
Earnings — What to Watch
| When HKT | Ticker | Consensus | What to look for |
|---|---|---|---|
| 22:00 | AAPL | 1.25 | iPhone sales and services revenue growth |
| 22:00 | GOOGL | 1.15 | Advertising revenue growth and cloud computing trends |
| 22:00 | MSFT | 1.20 | Cloud computing trends and gaming revenue growth |
Watchlist Scan
| Ticker | Sector | Why now |
|---|---|---|
| AAPL | Tech | Strong earnings and sector rotation |
| MSFT | Tech | Weak earnings and sector rotation |
| TSLA | Auto | Strong earnings and sector rotation |
| JPM | Finance | Strong earnings and sector rotation |
| XOM | Energy | Energy sector gains and supply chain disruptions |
What Could Break the Tape
- A strong earnings season, with 75% of S&P 500 companies beating estimates.
- A resolution to the US-China trade tensions, with a focus on improving trade relations and reducing tariffs.
- A decline in the US dollar, with the DXY falling below 95.
- A weak earnings season, with 50% of S&P 500 companies missing estimates.
- An escalation of the US-China trade tensions, with a focus on increasing tariffs and trade restrictions.
- A rise in the US dollar, with the DXY rising above 100.
Positioning Notes
- The S&P 500 is currently overbought, with a 14-day RSI of 70.
- The VIX is currently underbought, with a 14-day RSI of 30.
- The US dollar is currently overbought, with a 14-day RSI of 80.