Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.8%) closed at a fresh all-time high (4,297.95) thanks to an afternoon pickup in buying activity on below-average volume at the NYSE. The Dow Jones Industrial Average rose 0.6%, the Nasdaq Composite climbed 1.1%, and the Russell 2000 jumped 1.7%. Advancers had a 5-to-2 lead over decliners at the NYSE and a better than 2-to-1 lead at the Nasdaq.

The afternoon buying was a positive reaction to the Treasury Department's first quarter borrowing estimate. The Treasury Department plans to borrow $760 billion in Q1, which is $55 billion below the forecast from October due to higher net fiscal flows and a higher cash balance at the beginning of the quarter. Borrowing in Q2 is expected to reach $202 billion.

The 10-yr note yield was at 4.10% shortly before the announcement, and dropped to 4.06% in the immediate aftermath. The 2-yr note yield was at 4.33% just before the announcement, and dropped to 4.30% in the immediate aftermath. They settled the day at 4.09% and 4.33%, respectively. 

Today's trade had a modestly positive bias before the refunding estimate was announced, however, thanks in part to outperforming mega cap stocks. The Vanguard Mega Cap Growth ETF (MGK) closed with a 1.2% gain. 

The early positive bias was also a function of the market's wait-and-see mentality in front of a busy week. Specifically, the FOMC meeting followed by Fed Chair Powell's press conference is on Wednesday, and the January Employment Situation Report will be released on Friday.

Also, earnings season picks up this week with results from approximately 20% of the S&P 500, including Microsoft (MSFT 409.72, +5.79, +1.4%), Alphabet (GOOG 154.84, +1.05, +0.7%), Meta Platforms (META 401.02, +6.88, +1.8%), Amazon.com (AMZN 161.26, +2.14, +1.3%), Adv. Micro Devices (AMD 177.83, +0.58, +0.3%), and Apple (AAPL 191.73, -0.69, -0.4%).

Geopolitical angst was also part of the market narrative today after a drone attack by an Iranian-backed militant group on a U.S. outpost in Jordan that killed three U.S. soldiers and injured many others. Still, oil prices declined, suggesting the market is not overly concerned about disruptions to supplies despite President Biden saying that there will be a response to that attack. WTI crude oil futures dropped 1.5% today to $76.87/bbl.

This price action led to the underperformance of the S&P 500 energy sector, which fell 0.2%. The remaining ten sectors saw gains ranging from 0.3% to 1.4%. 

There is no U.S. economic data of note today.

• Nasdaq Composite: +4.1%
• S&P 500: +3.3%
• Dow Jones Industrial Average: +1.7%
• S&P Midcap 400: +0.3%
• Russell 2000: -0.8%

Looking ahead, Tuesday's economic calendar features:

• 9:00 ET: November FHFA Housing Market Index (prior 0.3%) and November S&P Case-Shiller Home Price Index (Briefing.com consensus 5.6%; prior 4.9%)
• 10:00 ET: January Consumer Confidence (Briefing.com consensus 113.0; prior 110.7) and December job openings (prior 8.790 mln)