Buy the Dip Mentality Remains Strong
Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as the buy the dip mentality remains strong. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:
U.S. stock index futures rose on Thursday morning with economic data and corporate earnings taking the reins as fears over the coronavirus outbreak eased slightly. At around 2:20 a.m. ET, Dow futures were up 156 points and indicated an implied positive open of more than 165 points, while futures on the S&P 500 and Nasdaq were also higher.
The S&P 500 (SPY) inched up +0.33% today. Sector advancers led decliners 7 to 4 as shown below in the sector graph. Communication services (XLC) led advancers higher with a +1.25% gain. Consumer staples (XLP), healthcare (XLV), industrials (XLI), real estate (XLRE), technology (XLK) and utilities (XLU) each enjoyed small gains of less than 1%. Energy (XLE) led decliners down with a -1.02% loss. Consumer discretionary (XLY), financials (XLF) and materials (XLB) each suffered minor losses of less than 1%.
The Dow Jones index climbed +88 points (+0.30%) to close at 29,379. The Nasdaq added +63 points (+0.67%) to settle at 9,572.
Buy the Dip Mentality Remains Strong
Stocks continued their march higher Thursday as strong economic data, earnings and tariff news lifted stocks.
China announced overnight it will halve tariffs on U.S. imports totaling about $75 billion. China’s finance ministry said the tariff cut was timed in conjunction with a U.S. decision last month to halve tariffs on roughly $120 billion worth of Chinese products. Tariffs on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, which will take effect on Feb. 14.
That decision was made as part of a broader “phase one” trade deal between China and the U.S. The agreement put the U.S.-China trade war, which had been hurting global growth prospects, on hold. President Donald Trump has said previously a phase-two agreement would be struck at a later date.
The cut also comes after the coronavirus death toll in China rose to 563, with a total of 28,018 cases confirmed as drugmakers race to find a vaccine.
“The sling shot from last Friday’s lows has happened quickly, showing us that dip buying remains strong,” said Frank Cappelleri, executive director at Instinet.
The Dow and Nasdaq are both up at least 4% week to date while the S&P 500 has gained 3.8%, on pace for its biggest weekly gain since June. The major indexes all dropped at least 1.8% last week.
More than 60% of S&P 500 companies have reported earnings thus far, with 71% of them beating analyst expectations, according to FactSet. The overall earnings growth rate has been low, but it is better than the more-than 4% contraction initially expected.
On the data front, weekly jobless claims fell to a nine-month low last week, reaching 202,000. The data follows better-than-forecast private payrolls numbers from ADP and Moody’s Analytics.
Notable S&P 500 Movers…
I’ve highlighted some notable S&P movers (both winners & losers).
Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.
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S&P 500 Sector Graph
S&P 500 (SPY)
Communication Services (XLC)
Consumer Discretionary (XLY)
Consumer Staples (XLP)
Real Estate (XLRE)
S&P 500 Sector Heat Map
Episode 1 goes over my basic investment strategy for individual investors (from years of watching and learning from CNBC).