The Daily Note Archives
Daily Note
3.23.2023
Equities: U.S. markets finished lower on Wednesday after the Federal Reserve increased interest rates by another 25 bps, its 9th rate hike since March 2022, to a target range of 4.75%-5%. The S&P 500 (SPY) fell 1.70%, the Dow Jones Industrial Average (DIA) declined 1.67%, and the NASDAQ 100 (QQQ) slipped 1.36%. The Federal Open Market Committee (FOMC) voted unanimously on the quarter point rate hike but also said that the U.S. banking system is “sound and resilient” despite recent turmoil. According to the Fed’s median forecast, the central bank is projected to raise rates just one more time in 2023. After rising sharply on Tuesday, treasury yields dropped with the U.S. 2-Year decreasing back below 3.95% and the U.S. 10-Year declining below 3.45% intraday. Regional banks sunk yesterday after Treasury Secretary Janet Yellen told U.S. Senate subcommittee that the U.S. was not currently working on “blanket insurance” for bank deposits. PacWest dropped more than 17% on the day after announcing it had lost more than $6 billion in deposits during the recent downturn in the industry. New Home Sales figures will be released on Thursday following Existing Home Sales data earlier this week.
Sectors: Utilities (XLU, -2.01%), Real Estate (XLRE, -58 bps), and Consumer Staples (XLP, -8 bps) were the only U.S. sectors to see losses on Tuesday. XLP is trading relatively in line with its 50-day and 200-day moving average. Energy (XLE) surged 3.46% and outpaced other sectors as Oil & Gas Exploration & Production (XOP) and Oil & Gas Equipment & Services (XES) were both up over 3%. Consumer Discretionary (XLY), Financials (XLF), and Communication Services (XLC) all gained more than 2% while Materials (XLB) and Industrials (XLI) both rose more than 1%. No sectors currently sit in oversold territory. Regional Banks (KRE, +5.76%) and Banks (KBE, +5.27%) bolstered XLF on the day. KRE still sits in oversold territory and is down nearly 25% over the past month.
Themes: Excellent performance for global themes yesterday with most thematic segments returning more than +1.75%. Mutlti-Theme (ARKK), Disruptive Tech (ARKW), and Solar (TAN) were the top performing segments, all climbing more than 5%. ARKW and ARKK have risen 38.91% and 29.13%, respectively, year-to-date, while TAN has added just 1.56%. Clean Energy (PBW, +4.93%) and Blockchain (BLOK, +4.14%) followed while Genomics (ARKG), FinTech (FINX), and Online Retail (IBUY) all added more than 3%. Just two segments were in the red on Tuesday: Biotech (SBIO, -1.16%) and Digital Infrastructure (SRVR, -45 bps). SBIO is approaching oversold territory.
Commodities & Yields: At Wednesday’s close, the U.S. 2-Year Treasury Yield stood at 3.945% and the U.S. 10-Year Treasury Yield stood at 3.449%.
Daily Note
3.22.2023
Equities: Ahead of the Wednesday’s interest rate decision, U.S. markets posted gains yesterday with the NASDAQ 100 (QQQ) rising 1.43%, the S&P 500 (SPY) increasing 1.31%, and the Dow Jones Industrial Average (DIA) adding 1.03%. All three major averages are now trading above relative 200-day moving averages. Investor sentiment was boosted by encouraging rhetoric from Janet Yellen and a rally from embattled bank and regional bank stocks. During a speech to the American Bankers Association on Tuesday, Treasury Secretary Janet Yellen said that the U.S. government is ready to provide further guarantees of deposits if the banking crisis worsens, but that authorities believe they have taken appropriate actions to stem liquidity problems in the sector. First Republic surged nearly 30% and U.S. listed shares of Credit Suisse gained more than 2% on Tuesday. Several other bank and regional bank names saw solid returns on the day as well. Existing home sales increased 14.5% month-over-month in February, the first monthly gains in 12 months and the largest monthly rise since July 2020. Sales remain down 22.6% year-over-year for February. After the close, Nike reported quarterly results that beat analyst expectations on the top and bottom lines. S&P 500 Low Volatility (SPLV, -25 bps) was the only U.S. factor strategy to finish lower. Meanwhile, S&P 500 Pure Value (RPV) and S&P 500 Pure Growth (RPG) climbed 2.47% and 1.99%, respectively. Emerging Markets (EEM) advanced 90 bps on strength from Mexico (EWW, +1.90%) and China (MCHI, +1.56%). Developed ex-U.S. Markets (EFA, +1.51%) were lifted by Germany (EWG, +2.23%), France (EWQ, +1.98%), and Switzerland (EWL, +1.89%).
Sectors: Utilities (XLU, -2.01%), Real Estate (XLRE, -58 bps), and Consumer Staples (XLP, -8 bps) were the only U.S. sectors to see losses on Tuesday. XLP is trading relatively in line with its 50-day and 200-day moving average. Energy (XLE) surged 3.46% and outpaced other sectors as Oil & Gas Exploration & Production (XOP) and Oil & Gas Equipment & Services (XES) were both up over 3%. Consumer Discretionary (XLY), Financials (XLF), and Communication Services (XLC) all gained more than 2% while Materials (XLB) and Industrials (XLI) both rose more than 1%. No sectors currently sit in oversold territory. Regional Banks (KRE, +5.76%) and Banks (KBE, +5.27%) bolstered XLF on the day. KRE still sits in oversold territory and is down nearly 25% over the past month.
Themes: Excellent performance for global themes yesterday with most thematic segments returning more than +1.75%. Mutlti-Theme (ARKK), Disruptive Tech (ARKW), and Solar (TAN) were the top performing segments, all climbing more than 5%. ARKW and ARKK have risen 38.91% and 29.13%, respectively, year-to-date, while TAN has added just 1.56%. Clean Energy (PBW, +4.93%) and Blockchain (BLOK, +4.14%) followed while Genomics (ARKG), FinTech (FINX), and Online Retail (IBUY) all added more than 3%. Just two segments were in the red on Tuesday: Biotech (SBIO, -1.16%) and Digital Infrastructure (SRVR, -45 bps). SBIO is approaching oversold territory.
Commodities & Yields: Broad Commodities (DJP) added 7 bps on Tuesday with Natural Gas (UNG) gaining 3.62%, WTI Crude Oil (USO) rising 2.41%, and Gold (GLD) falling 1.89%. The U.S. Dollar (UUP) dipped 4 bps, U.S. Aggregate Bonds (AGG) declined 30 bps, and 20+ Year Treasury Bonds (TLT) sunk 86 bps. At Tuesday's closing bell, the U.S. 2-Year Treasury Yield stood at 4.175% and the U.S. 10-Year Treasury Yield stood at 3.596%.
Daily Note
3.21.2023
Equities: U.S. markets closed higher on Monday as investors weighed continued turmoil in the banking industry and the upcoming interest rate decision by the Federal Reserve on Wednesday. The Dow Jones Industrial Average (DIA) climbed 1.19%, the S&P 500 (SPY) rose 96 bps, and the NASDAQ 100 (QQQ) added 35 bps. Small-caps outperformed with the Russell 2000 (IWM) gaining 1.30%. U.S.-listed shares of Credit Suisse dove nearly 53% yesterday after UBS agreed to buy Credit Suisse for 3 billion Swiss francs, or $3.2 billion. Additionally, JPMorgan Chase is now advising First Republic Bank on strategic alternatives after last week’s $30 billion deposit failed to stop the slide for the bank’s stock. According to the CME FedWatch tool, there is a 74.5% chance of a 25 bps interest rate increase and a 25.5% chance of no rate hike on Wednesday. Treasury yields were higher yesterday with the U.S. 2-Year topping 4.00% and the U.S. 10-Year rising above 3.50% intraday. Amazon also announced plans on Monday to lay off 9,000 more employees in the coming weeks after cutting 18,000 employees from November to January. All U.S. factor strategies were in the green led by S&P 500 Momentum (SPMO, +1.81%) and S&P 500 Pure Growth (RPG, +1.78%). RPG sits just 2.29% above 52-week lows. Developed ex-U.S. Markets (EFA) increased 1.56% and the U.K. (EWU) and France (EWQ) both jumped more than 2%. Emerging Markets (EEM) were lifted by Mexico (EWW, +1.08%). China (MCHI) was down 38 bps on the day.
Sectors: Materials (XLB) rose 2.05% yesterday, outpacing other U.S. sectors, all of which posted positive returns. After falling nearly 7% last week, Energy (XLE) gained 1.98% on Monday, bolstered by Oil & Gas Equipment & Services (XES, +3.15%) and Oil & Gas Exploration & Production (XOP, +2.31%). Consumer Staples (XLP), Industrials (XLI), Health Care (XLV), Financials (XLF), and Real Estate (XLRE) were all up more than 1%. XLI is now trading within 6% of 52-week highs. Technology (XLK) lagged, adding just 27 bps. Only two industries saw losses yesterday: Software & Services (XSW, -32 bps) and Transportation (XTN, -20 bps). Insurance (KIE) was strong, climbing 2.96%.
Themes: Mixed sesssion for global themes with Cannabis (MJ) dropping 2.47% to new 52-week lows. MJ is down 18.58% over the past month and has plunged 62.23% in the last year. Multi-Theme (ARKK) also sunk 1.19% yesterday while Genomics (ARKG) and Disruptive Tech (ARKW) both declined 88 bps. Clean Energy (PBW) dipped 13 bps and remains in oversold territory. Smart Infrastructure (GRID) was the top performing thematic segment on the day, increasing 1.86%. Solar (TAN) and Water (PHO) were up 1.58% and 1.50%, respectively. Advanced Materials (REMX), Robotics & AI (ROBO), Connectivity (FIVG), Cyber Security (HACK), and Digital Infrastructure (SRVR) all gained more than 1%. ROBO has risen 12% year-to-date an gathered $39 million in net inflows in the period.
Commodities & Yields: The U.S. Dollar (UUP) slipped 57 bps, U.S. Aggregate Bonds (AGG) declined 40 bps, and TIPS Bonds (TIP) added 9 bps. At Monday’s closing bell, the U.S. 2-Year Treasury Yield stood at 3.953% and the U.S. 10-Year Treasury Yield stood at 3.488%. Broad Commodities (DJP, +10 bps) inched higher as Energy (DBE) rose 80 bps and Precious Metals (DBP) were up 24 bps. WTI Crude Oil (USO) increased 80 bps, Natural Gas (UNG) decreased 4.36%, and Copper (CPER) gained 1.77%.
U.S. Sector & Industry Playbook
3.20.2023
An overview of the U.S. Sector ETF landscape - Performance, Flows, Valuations, Earnings, & Technicals.
Daily Note
3.20.2023
Equities: As First Republic sunk almost 33%, U.S. markets finished lower on Friday with the Dow Jones Industrial Average (DIA) dropping 1.20%, the S&P 500 (SPY) declining 1.16%, and the NASDAQ 100 (QQQ) falling 47 bps. Despite Friday's losses, QQQ and SPY posted gains last week, climbing 5.83% and 1.45%, respectively. DIA dipped 12 bps on the week. In the latest development in the banking crisis, Swiss banking giant UBS agreed to purchase rival Credit Suisse on Sunday. The combined UBS-Credit Suisse will have about $5 trillion in invested assets. This week, investors will be focused on the Federal Open Market Committee meeting and Wednesday's interest rate decision along with key housing data for February. U.S. treasury yields fell sharply on Friday with the 2-year sinking below 3.85% and the 10-year dropping below 3.40%. All U.S. factor strategies saw negative returns on Friday with S&P 500 Dividend (SPYD, -2.05%) and S&P 500 Pure Value (RPV, -1.79%) underperforming. RPV declined more than 5% last week and is down nearly 16% over the past month. S&P 500 Growth (SPYG) added 2.74% last week and is down just 1.65% in the last month. Emerging Markets (EEM) slid 61 bps on Friday on losses from Mexico (EWW, -2.36%) and Brazil (EWZ, -1.75%). Developed ex-U.S. Markets (EFA, -1.19%) were pulled lower by France (EWQ, -1.71%) and the U.K. (EWU, -1.52%). EEM dipped 61 bps last week while EFA fell 2.14%.
Sectors: All U.S. sectors were in the red on Friday with Financials (XLF, -3.22%) falling the furthest. XLF was once again dragged lower by Regional Banks (KRE, -5.99%) and Banks (KBE, -5.57%). XLF, KRE, and KBE all sit in oversold territory. Real Estate (XLRE) declined 2.29% while Industrials (XLI), Energy (XLE), Materials (XLB), Health Care (XLV), and Consumer Discretionary (XLY) all dropped more than 1% on the day. Technology (XLK) was the best performing sector, dipping just 14 bps. XLK and Communication Services (XLC) are the only two sectors currently trading above relative 50-day and 200-day moving averages. Last week, XLK and XLC both jumped more than 5% while XLE dropped 6.85% and XLF decreased 5.92%.
Themes: Just two thematic segments posted gains on Friday: Blockchain (BLOK, +3.17%) and Big Data (AIQ, +4 bps). Solar (TAN), Clean Energy (PBW), and Genomics (ARKG) were the worst performing segments, all sinking more than 3%. PBW entered oversold territory and is curretnly trading 22.55% below its 200-day moving average. Smart Infrastructure (GRID), Wind (FAN), Industrial Revolution (ARKQ), Digital Infrastructure (SRVR), and 3D Printing (PRNT) all declined more than 2% on the day. Last week, Blockchain (BLOK) surged 13.46% and Disruptive Tech (ARKW) rose 9.70%. Solar (TAN) lagged last week, losing 7.53%.
Commodities & Yields: U.S. Aggrgeate Bonds (AGG) increased 63 bps, 20+ Year Treasury Bonds (TLT) gained 1.50%, and the U.S. Dollar (UUP) dipped 56 bps. At Friday's closing bell, the U.S. 2-Year Treasury Yield stood at 3.848% and the U.S. 10-Year Treasury Yield stood at 3.417%. Broad Commodities (DJP) declined 26 bps as Natural Gas (UNG) fell 6.47%, WTI Crude Oil (USO) dropped 2.31%, and Gold (GLD) rose 2.91%.
Daily Note
3.17.2023
Equities: After sinking early in the day, U.S. markets finished higher on Thursday with the NASDAQ 100 (QQQ) jumping 2.64%, the S&P 500 (SPY) rising 1.75%, and the Dow Jones Industrial Average (DIA) climbing 1.16%. QQQ is trading above its 50-day and 200-day moving average. Small-Caps (IJR) and Mid-Caps (IJH) also increased more than 1.35%. Markets were lifted by the news that a group of financial institutions agreed to deposit $30 billion in First Republic in a sign of confidence in the banking system. The group of institutions includes Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley, amongst others. Since February 1, First Republic has plummeted 75.67%. Investor sentiment was also lifted after Credit Suisse announced it will borrow up to nearly $54 billion from the Swiss National Bank to assuse short-term liquidity. Investors continue to mull on the Federal Reserve's interest rate decision next Wednesday. According to the CME FedWatch Tool, there is an 81.2% chance of a 25-bps interest rate increase and an 18.8% chance of no interest rate increase. Industrial Production results for February will be released on Friday. All U.S. factor strategies posted gains on Thursday led by growth-oriented pockets of the markets. S&P 500 High Beta (SPHB) rose 2.15% while S&P 500 Growth (SPYG) added 1.85%. Emerging Markets (EEM, +1.53%) benefitted from solid returns from Brazil (EWZ, +2.09%), Mexico (EWW, +2.06%), and India (INDA, +1.74%). Developed ex-U.S. Markets (EFA) increased 1.55% as South Korea (EWY) climbed 3.05%. The Netherlands (EWN)and Japan (EWJ) were both up more than 2% as well.
Sectors: Real Estate (XLRE) was flat yesterday while all other U.S. sectors saw positive returns. Technology (XLK) and Communication Services (XLC) outperformed, rising 2.81% and 2.25%, respectively. XLK received a boost from Semiconductors (XSD, +3.37%). XLK and XLC are both trading above relative 50-day and 200-day moving averages. Financials (XLF) also gained 1.91%, bolstered by Regional Banks (KRE, +3.52%) and Banks (KBE, +3.07%). XLF is the only sector still in oversold territory. Over the past week, KRE has gathered nearly $1.4 billion in net inflows, but is still down 26.51% in the last month. Consumer Discretionary (XLY), Industrials (XLI), Materials (XLB), and Energy (XLE) all gained more than 1% on the day.
Themes: Solar (TAN) slipped 1.34% and was the only global thematic segment to see losses on Thursday. Disruptive Tech (ARKW) outpaced other sectors, surging 4.22%. ARKW has climbed 10.19% so far this week and is up nearly 34% year-to-date. eSports & Video Games (ESPO), Evolving Consumer (SOCL), Blockchain (BLOK), and Multi-Theme (ARKK) all increased more than 3%. Cloud Computing (SKYY, +2.80%) and Industrial Revolution (ARKQ, +2.78%) were also strong. Cannabis (MJ) and Advanced Materials (REMX) each added more than 1% but remain in oversold territory. MJ is down 13.85% thus far in 2023 and has plunged more than 58% over the past year.
Commodities & Yields: At Thursday's closing bell the U.S. 2-Year Treasury Yield stood at 4.161% and the U.S. 10-Year Treasury Yield stood at 3.575%. U.S. Aggregate Bonds (AGG) declined 39 bps, TIPS Bonds (TIP) fell 1.13%, and the U.S. Dollar (UUP) dipped 11 bps. Broad Commodities (DJP) added 26 bps with Natural Gas (UNG) increasing 2.96%, Gasoline (UGA) rising 1.31%, and Lead (LD) gaining 2.57%.
Daily Note
3.16.2023
Equities: Amid continued turmoil in the banking industry, U.S. markets were mixed on Wednesday with the Dow Jones Industrial Average (DIA) falling 82 bps and the S&P 500 (SPY) dropping 63 bps while the NASDAQ 100 (QQQ) added 52 bps. Most bank and regional bank stocks saw losses yesterday as Credit Suisse plunged nearly 14% after its biggest backer, Saudi National Bank, said it won’t provide the Swiss bank with further financial help. Towards the end of the trading session, a Swiss regulator announced that the country’s central bank would give Credit Suisse liquidity if necessary, providing some relief to broader markets. The Producer Price Index declined 0.1% month-over-month in February, below the estimate for a 0.3% increase. Retail sales dropped 0.4% for the month, in line with expectations, and was pulled lower by decreases in auto sales in addition to bar and restaurant receipts. Additionally, the Empire State Manufacturing survey for March, a gauge of activity in the New York region, posted a -24.6 reading, down 19 points from a month ago. After the close, Adobe posted quarterly results that topped analyst estimates on the top and bottom lines and lifted its full-year forecast. Treasury yields fell sharply once again with the U.S. 2-Year touching 3.75% and the U.S. 10-Year touching 3.40% intraday yesterday. All U.S. factor strategies posted negative returns with S&P 500 Pure Growth (RPG, -3.15%) and S&P 500 Pure Value (RPV, -1.99%) hit the hardest. Developed ex-U.S. Markets (EFA) dropped 3.10% as the U.K. (EWU), Germany (EWG), and France (EWQ) were all down more than 3.50%. Emering Markets (EEM, -1.71%) were pulled lower by South Africa (EZA, 3.25%) and Mexico (EWW, -3.22%).
Sectors: Five of the 11 U.S. sectors recorded gains yesterday with Utilities (XLU, +1.36%) and Communication Services (XLC, +1.08%) outperforming. Consumer Staples (XLP) rose 65 bps while Real Estate (XLRE) and Technology (XLK) posted modest increases. Energy (XLE) plunged 5.37%, pulled lower by Oil & Gas Equipment & Services (XES, -6.91%) and Oil & Gas Exploration & Production (XOP, -6.33%). Materials (XLB) also declined 3.24% and was impacted by Metals & Mining (XME, -5.94%). Financials (XLF) and Industrials (XLI) fell 2.67% and 2.46%, respectively, on the day. XLF and XLE currently sit in oversold territory and XLI is approaching oversold territory.
Themes: Global themes were weak on Wednesday with just 4 thematic segments finishing higher: Multi-Theme (ARKK, +79 bps), Cloud Computing (SKYY, +64 bps), Disruptive Tech (ARKW, +57 bps), and Genomics (ARKG, +14 bps). Advanced Materials (REMX) lagged other segments, declining 4.89%. Clean Energy (PBW), Smart Infrastructure (GRID), Wind (FAN), and Solar (TAN) all fell more than 3% while Casinos & Gaming (BETZ), Cannabis (MJ), and NextGen Transportation (DRIV) all dropped more than 2%. Cannabis (MJ) remains in oversold territory and hit new 52-week lows. Advanced Materials (REMX) also hit 52-week lows and entered oversold territory and Clean Energy (PBW) entered oversold territory.
Commodities & Yields: TBroad Commodities (DJP) were down 1.71% on weakness from Energy (DBE, -3.95%) and Industrial Metals (DBB, 2.66%). WTI Crude Oil (USO) dropped 4.62%, Natural Gas (UGA) declined 5.48%, and Copper (CPER) sunk 3.23%.U.S. Aggregate Bonds (AGG) rose 1.00%, 20+ Year Treasury Bonds (TLT) jumped 1.93%, and the U.S. Dollar (UUP) climbed 1.07%. At yesterday’s closing bell, the U.S. 2-Year Treasury Yield stood at 3.925% and the U.S. 10-Year Treasury Yield stood at 3.470%.
Daily Note
3.15.2023
Equities: U.S. markets rallied on Tuesday after a modest Consumer Price Index reading for February and a recovery of several names in the bank and regional bank industries. The NASDAQ 100 (QQQ) climbed 2.14%, the S&P 500 (SPY) gained 1.68%, and the Dow Jones Industrial Average (DIA) rose 1.06%. Small-Caps were also strong with the Russell 2000 (IWM) adding 1.87%. The Consumer Price Index increased 0.4% month-over-month and 6.0% year-over-year in February, in line with consensus estimates. Energy prices dipped 0.6% month-over-month and remain up 5.2% year-over-year while shelter costs, which make up about one-third of the index’s weighting, jumped 0.8%, bringing the annual gain up to 8.1%. After falling sharply on Monday, treasury yields increased with the U.S. 2-Year jumping above 4.20% and the U.S. 10-Year rising above 3.65% intraday on Tuesday. Investors are still considering the risk of contagion in the bank stocks following the collapse of Silicon Valley Bank and Signature Bank. Moody’s Investors Service moved its view on the U.S. banking system to negative from stable on Monday, citing a “rapidly deteriorating operating environment.” Meta officially announced plans to cut 10,000 more employees following a headcount reduction of 11,000 employees in November. The Producer Price Index results will also be released on Wednesday.
Sectors: Most U.S. sectors saw positive returns yesterday led by Real Estate (XLRE, +1.61%) and Utilities (XLU, +1.54%). Health Care (XLV) also climbed 93 bps on strength from Biotech (XBI, +2.91%) and Pharmaceuticals (XPH, +1.83%). Technology (XLK) and Consumer Staples (XLP) were both up more than 50 bps on the day. Financials (XLF) was down another 3.95% as Regional Banks (KRE) plummeted 12.31% and Banks (KBE) fell 9.96%. KRE and KBE both sit at 52-week lows. Energy (XLE) declined 2.03% on Monday, dragged lower by Oil & Gas Equipment & Services (XES, -4.99%) and Oil & Gas Exploration & Production (XOP, -3.05%). Materials (XLB) also dropped 1.02%.
Themes: Blockchain (BLOK) handily outpaced other global thematic segments on Monday as it surged 4.28%. Genomics (ARKG) also climbed 3.71% while Multi-Theme (ARKK), Biotech (SBIO), and Disruptive Tech (ARKW) returned more than +2%. Digital Payments (IPAY, -2.74%), Casinos & Gaming (BETZ, -2.30%), and FinTech (FINX, -2.28%) were the worst performing segments on the day. Digital Payments (IPAY) and FinTech (FINX) both entered oversold territory. Cannabis (MJ) dipped another 27 bps to new 52-week lows. MJ has declined more than 25% in the last 3 months.
Commodities & Yields: The U.S. Dollar (UUP) dropped 92 bps, U.S. Aggregate Bonds (AGG) added 80 bps, and 20+ Year Treasury Bonds (TLT) rose 23 bps. At Monday's closing bell, the U.S. 2-Year Treasury Yield stood at 3.958% and the U.S. 10-Year Treasury Yield stood at 3.543%. Broad Commodities (DJP) increased 51 bps as Natural Gas (UNG) climbed 7.59%, Gold (GLD) added 2.29%, and Silver (SLV) jumped 6.04%.
Daily Note
3.14.2023
Equities: U.S. markets were mixed on Monday as investors weighed continued turmoil in regional banks following the collapse of Silicon Valley Bank. The NASDAQ 100 (QQQ) added 74 bps while the Dow Jones Industrial Average (DIA) and the S&P 500 (SPY) sunk 28 bps and 14 bps, respectively. According to a joint statement from the Fed, Treasury Department, and the Federal Deposit Insurance Corporation issued on Sunday, all Silicon Valley Bank depositors would have access to their money starting Monday. The backstop plan also includs additional funding to be made available for other banks. On Sunday, regulators also announced they would seize Signature Bank to protect its depositors and the stability of the U.S. financial system after the bank withdrew more than $10 billion in deposits on Friday. President Joe Biden said Monday that Americans can be confident that the U.S. banking system is safe after and insisted that no losses will be borne by U.S. taxpayers. After the close, the Federal Reserve announced its top regulator will be conducting a review into the events leading up to the implosion of Silicon Valley Bank. Several regional bank names saw significant losses on Monday including First Republic (-61.83%), Western Alliance (-47.06%), KeyCorp (-27.33%), Zions (-25.72%), and PacWest (-21.05%). These developments have prompted investors to consider whether the Federal Reserve will pause its rate hike program. According to the CME FedWacth Tool at the closing bell yesterday, there was a 40.2% chance of no rate increase and a 59.8% probability of a 25-bps rate hike at next week’s FOMC meeting. Treasury yields continued to plunge yesterday with the U.S. 2-Year falling below 4% and the U.S. 10-Year dropping below 3.50% intraday. Value-oriented names continued to underperform with S&P 500 Pure Value (RPV) dropping 3.32%. Most U.S. factors finished lower yesterday while S&P 500 Low Volatility (SPLV) and S&P 500 Growth (SPYG) both gained 33 bps. Developed ex-U.S. Markets (EFA) were down 68 bps as Germany (EWG) and France (EWQ) both declined more than 1% while Emerging Markets (EEM) rose 16 bps.
Sectors: Most U.S. sectors saw positive returns yesterday led by Real Estate (XLRE, +1.61%) and Utilities (XLU, +1.54%). Health Care (XLV) also climbed 93 bps on strength from Biotech (XBI, +2.91%) and Pharmaceuticals (XPH, +1.83%). Technology (XLK) and Consumer Staples (XLP) were both up more than 50 bps on the day. Financials (XLF) was down another 3.95% as Regional Banks (KRE) plummeted 12.31% and Banks (KBE) fell 9.96%. KRE and KBE both sit at 52-week lows. Energy (XLE) declined 2.03% on Monday, dragged lower by Oil & Gas Equipment & Services (XES, -4.99%) and Oil & Gas Exploration & Production (XOP, -3.05%). Materials (XLB) also dropped 1.02%.
Themes: Blockchain (BLOK) handily outpaced other global thematic segments on Monday as it surged 4.28%. Genomics (ARKG) also climbed 3.71% while Multi-Theme (ARKK), Biotech (SBIO), and Disruptive Tech (ARKW) returned more than +2%. Digital Payments (IPAY, -2.74%), Casinos & Gaming (BETZ, -2.30%), and FinTech (FINX, -2.28%) were the worst performing segments on the day. Digital Payments (IPAY) and FinTech (FINX) both entered oversold territory. Cannabis (MJ) dipped another 27 bps to new 52-week lows. MJ has declined more than 25% in the last 3 months.
Commodities & Yields: The U.S. Dollar (UUP) dropped 92 bps, U.S. Aggregate Bonds (AGG) added 80 bps, and 20+ Year Treasury Bonds (TLT) rose 23 bps. At Monday's closing bell, the U.S. 2-Year Treasury Yield stood at 3.958% and the U.S. 10-Year Treasury Yield stood at 3.543%. Broad Commodities (DJP) increased 51 bps as Natural Gas (UNG) climbed 7.59%, Gold (GLD) added 2.29%, and Silver (SLV) jumped 6.04%.
Daily Note
3.13.2023
Equities: On Friday, U.S. markets were shaply lower once again after the largest bank failure since the global finiancial crisis in 2008. Silicon Valley Bank shut down and regulators took control after sizeable losses in its bond portfolio. The news rippled through other bank stocks and several were repeatedly halted intraday on Friday. The S&P 500 (SPY) dropped 1.44%, the NASDAQ 100 (QQQ) fel 1.40%, and the Dow Jones Industrial Average (DIA) declined 1.04% on the day. All three major averages were down more than 4% last week and each are now trading below relative 50-day and 200-day moving averages. Friday's Employment Situation report showed that nonfarm payrolls increased 311K in February, well above expectations. The unemployment rate also rose to 3.6% as the labor force participation rate increased to 62.5%, the highest level since March 2020. Treasury yields plummeted on Friday with the U.S. 2-Year sinking below 4.60% and the U.S. 10-Year falling below 3.70% intraday. This week, investors will be looking towards more earnings reports, Consumer Price Index (CPI) results, Producer Price Index (PPI) results, Retail Sales figures, Housing Starts & Permits numbers, and Industrial Production results. All U.S. factor strategies saw losses on Friday with S&P 500 High Beta (SPHB, -2.94%) and S&P 500 Pure Value (RPV, -2.81%) falling the furthest. All factors declined last week with value-oriented pockets of the markets underperforming. RPV plunged 8.56% on the week. Developed ex-U.S. Markets (EFA) fell 1.07% on Friday on weakness from Hong Kong (EWH, -2.29%) and Australia (EWA, -1.77%). Emerging Markets (EEM) dipped 53 bps as Brazil (EWZ) and Mexico (EWW) both decreased more than 2%. EEM declined 4.30% last week and EFA sunk 3.15%.
Sectors: All U.S. sectors posted negative returns for the second consecutive session on Friday. Real Estate (XLRE) dropped 3.19% and was the worst performing sector followed by Materials (XLB, -2.13%). Financials (XLF, -1.82%) was dragged lowed by Capital Markets (KCE, -4.70%), Regional Banks (KRE, -4.39%), and Banks (KBE, -4.17%). Technology (XLK), Utilities (XLU), Communication Services (XLC), Energy (XLE), and Consumer Discretionary (XLY) all declined at least 1% on the day. XLE, XLF, and Health Care (XLV) all currently sit in oversold territory. All sectors were in the red last week with XLF lagging, plummeting 8.50%. KRE and KBE were down 16.05% and 14.67%, respectively, on the week amid the collapse of Silicon Valley Bank.
Themes: Another weak session for global themes on Friday as all segments finished down. Biotech (SBIO) and Genmoics (ARKG) trailed other thematic segments, each falling more than 4%. Cloud Computing (SKYY), FinTech (FINX), Disrutpive Tech (ARKW), Multi-Theme (ARKK), Clean Energy (PBW), Cannabis (MJ), and Online Retail (IBUY) all declined more than 3%. Evolving Consumer (SOCL) was the best performing segment, dipping just 42 bps. The KraneShares CSI China Internet ETF (KWEB) added 39 bps on the day, the only thematic ETF to post gains. Cannabis (MJ) and Biotech (SBIO) are the only segments in oversold territory. All segments fell at least 2% last week. Genomics (ARKG) dropped 11.42%, Multi-Theme (ARKK) sunk 10.97%, and Biotech (SBIO) dipped 10.15% on the week.
Commodities & Yields: U.S. Aggregate Bonds (AGG) jumped 1.17%, 20+ Year Treasury Bonds (TLT) surged 3.45%, and the U.S. Dollar (UUP) dropped 63 bps on Friday. At the closing bell, the U.S. 2-Year Treasury Yield stood at 4.580% and the U.S. 10-Year Treasury Yield stood at 3.682%. Broad Commodities (DJP) increased 71 bps as Energy (DBE) rose 1.39% and Precious Metals (DBP) gained 2.01%. Gold (GLD) climbed 2.16% and WTI Crude Oil (USO) was up 1.36%.