Tuesday, January 04, 2022

DJIA: 36,799.65, up 214.59
S&P 500: 4,793.54, down 3.02
Nasdaq: 15,622.72, down 210.08

Stocks bifurcate; Treasuries pressured

U.S. equity benchmarks bifurcated on Tuesday, with stocks tied to economic reopenings advancing, while a recent jump in Treasury yields appeared to weigh on growth-related shares. The S&P 500 drifted less than 0.1% from yesterday’s record closing level, while the Dow climbed 214 points to a fresh all-time high. The tech-heavy Nasdaq Composite slumped 1.3%.

Treasuries remained under pressure, with the yield on the 10-year note up one basis point (0.01%) to 1.65% after having spiked 13 basis points (0.13%) on Monday. Several factors have seemingly contributed to the back-up in Treasury rates, including the growing expectation that the Federal Reserve could tighten monetary policy sooner than previously forecasted as the relatively milder Omicron COVID-19 variant appears unlikely to upend the economic recovery. In commodities, WTI crude rose 1.2% to $76.97/barrel despite OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) agreeing to proceed with planned production increases.

Six of 11 S&P 500 sectors closed in negative territory, with the Health Care group leading losses. Technology shares also trailed, with Apple Inc. shedding 1.3%. Energy shares were among the standouts, with Halliburton Co. jumping 6% following an analyst upgrade. In other corporate news, Ford Motor Co. rallied 11.4% on plans to double the production capacity of its electric truck.

On the data front, the Institute for Supply Management (ISM) showed the U.S. manufacturing sector expanded at the slowest pace in nearly a year in December. Separately, the Jobs Openings and Labor Turnover Survey (JOLTS) revealed a record 4.5 million Americans quit their jobs in November while available positions remained elevated at 10.5 million.

Read more about it here.