Market Update-US Equity Sectors –Best Weakest performing sp500

Market Update – equities were strong out of the gate this morning, spurred higher by additional strong earnings (FDX was the highlight today), positive housing #s (the new home sales was the second recent housing data point that came in better than expected), and continued progress in Europe (the European bank stress tests, while panned in the press, were received well by investors judging by market action today).  The M&A market also is helping risk sentiment (esp. the SNY/GENZ story).  The market had a tough time w/the 200day MA (1113) for most of the day as investors, esp. long-only MFs, are reluctant to chase stocks higher, but the tone of the tape has improved meaningfully in the last few weeks (dips are being viewed as buying opportunities) and the market did manage to close at its highs (we closed 2 points ahead of the 200day after staging a strong rally for the last 60 min of trading); the next big level to watch will be 1118 (the closing highs from back in June).  Two pieces of news that slipped out late in trading today helped contribute to the late-day rally: the Basel committee published its new proposals for Basel-3 @ 1pmET(the first reaction to the proposals was positive for banks) and Moody’s (@ 2pmET) said that the net impact of the fin reg reform was positive for bank standalone credit rating (although some banks could see downward ratings pressure b/c of the removal of gov’t support).  The SP500 has closed in the green for 12 of the last 15 sessions and for Jul, the major US bourses are up ~8% (the best monthly performance since Apr ’09), prompting a bit of performance anxiety to set in (on a YTD basis, the Dow/Nazz/SP are back to about flat while the Russell is up >6%).  Volumes were on the light side today in stocks and investors noticed that Treasuries, the yen, and equities all rallied into the bell (a counterintuitive trade). LIK

·         US Equity Sectors – the -omebuilders closed up more than 2% today on back of the better-than-expected new home sales (MOH, SPF, PHM, RYL, KBH were all up >4%).  The transports rallied more than 2%, helped by FDX (that stock jumped more than 5% after raising its profits outlook), and the airlines (CAL, AMR, DAL were all up more than 5%).  HC stocks rallied 1.4% and outpaced the broader sp500, helped by biotechs (GENZ jumped another 7% on back of takeover speculation while some of its peers, like BIIB and CELG, rallied in sympathy) and the HMOs (WCG jumps >4%).  The industrials were up 1.5% and extended their recent strong gains (for the month of Jul, the industrials are up more than 11%, one of the best acting groups in the whole market ).  The trans were a big part of the industrial rally, but other stocks also participated (like GE, which rallied another 2.6% today; the 200day MA is coming up for GE at 16.36 and is the stock’s next big level).  Tech ended up just 0.6% and underperformed the broader tape (no one specific stock or sub-group accounted for the bulk of the underperformance in tech).  Telecom ended up >1.5% and extends its v strong rally (this space has been one of the best acting groups in the market since T and VZ earnings last week; T shrs today received their first upgrade in more than a year when Deutsche).  S shrs led telecoms today w/a 7% rally (ahead of their earnings on Wed).  The financials closed up 1.5%, helped higher by banks (up 2.18%) and REITs (up 2.5%).  Materials, utilities, and staples all closed up 40-50bp (and underperformed). 

·         Best performing sp500 stocks: BIIB, GENZ, ODP, S, DVA, RF, FDX, STI, NYT, AIG

·         Weakest: DV, FMC, CF, APOL, MON, EXPE, NEM, SYK, AKS, WMT