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Afternoon Note

Yields Slumping

By Charles Payne, CEO & Principal Analyst
7/22/2021 1:26 PM

The major indices are trading in a tight range.  The weaker than expected jobs numbers has put a bit of a damper on the stock and bond market. These numbers have added to investor concerns to the overall strength of the job market, especially as Covid-19/Delta variant cases continue to rise.  Fed Chairman Powell expects the labor market to build momentum in the fall, but the increase in cases, and more states talking about new mandates, could delay it.

Yields are lower on the back of the report, trading below 1.25%.  Inflation, sticky or transitory, and the potential for the fed to tighten sooner than forecasted, albeit, unlikely, isn’t doing anything to move yields higher.

Three of the 11 S&P 500 are in the green. Technology is the best performing sector, helped in large part by high cap growth stocks, and FAANG leading the way, all up with the exception of Netflix (NFLX). Microsoft is also up nicely, gaining 1.2%. Energy is the worst performing sector, despite oil rising as supply tightens. 

S&P 500 Index

 

-0.17%

Communication Services XLC

 

-0.36%

Consumer Discretionary XLY

 

-0.15%

Consumer Staples XLP

 

-0.25%

Energy XLE

 

-1.50%

Financials XLF

 

-1.43%

Health Care XLV

+0.26%

 

Industrials XLI

 

-0.46%

Materials XLB

 

-0.24%

Real Estate XLRE

 

-1.16%

Technology XLK

+0.36%

 

Utilities XLU

+0.12%

 
 

Breadth is decidedly negative today despite new highs outpacing new lows.

Market Breadth

NYSE

NASDAQ

Advancing

878

1,208

Declining

1,328

2,927

52 Week High

63

73

52 Week Low

14

37

Up Volume

275.98M

772.81M

Down Volume

1.44B

1.26B

Earnings continues after the bell with Intel (INTC).  It will be interesting to hear what they have to say about chip shortages.  According to Refinitiv, 15% of the S&P 500 has reported earnings, and of those, 88% have beat.

Housing

Existing home sales recovered from a four-month slump, increasing 1.4% in June to 5.86 million units. 

Inventory of homes rose 3.3% from May to 1.25 million, but it is down 18.8% year over when it was 1.54 million.  Laurence Yun, NAR’s chief economist stated, "Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales. Home sales continue to run at a pace above the rate seen before the pandemic. At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year."  The median home price has risen 23.4% year over year to $363,000.


 

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