S&P 500 Closes Below 50-Day Moving Average Despite Good Data
To start, let's recap the good economic data investors received this week:
That's a lot of good news, but nine of the 11 S&P 500 sectors still closed lower. The materials (-3.2%), utilities (-3.1%), industrials (-1.6%), and communication services (-1.2%) sectors underperformed with 1-3% losses. The energy (+3.3%) and consumer discretionary (+0.5%) sectors closed higher.
The inference behind this discrepancy was that the market was wrestling with the peak growth narrative, which entails slower growth rates, especially when considering other negative-sounding factors.
In the corporate space, 3M (MMM), American Express (AXP), Comcast (CMCSA), PNC (PNC), and Timken (TKR) provided cautious-sounding business commentary. Apple (AAPL) didn't excite investors with its annual product event. Oracle (ORCL) provided underwhelming earnings news.
In addition, not only was there uncertainty about infrastructure and the debt ceiling, but there were also growing problems in China. Beijing's regulatory crackdown persisted, a Chinese province entered lockdown because of a Covid outbreak, and reports discussed the possibility of Evergrande -- one of China's largest property developers -- defaulting on its debt.
There was one good rebound day this week, but sellers had a firm grip on the market, leaving the S&P 500 below its 50-day moving average (4436) on a closing basis. The Treasury market saw some selling interest, too, whether it was because of the decent economic data, cash-raising efforts, or technical factors. The 10-yr yield increased three basis points to 1.37%.
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2021-126997 (Exp. 12/21)