Mid-day: Stocks and interest rates do the national anthem

The S&P 500 is up 0.8% to trade at session highs along with the Nasdaq Composite (+1.2%), Dow Jones Industrial Average (+1.0%), and Russell 2000 (+1.4%).

The benchmark index is again trying to stay above the 4500 level while investors digest a bunch of corporate news and a persistent rise in interest rates. The 10-yr yield is up four basis points to 1.96% and is getting closer to that psychological 2.00% level.

Nine of the 11 S&P 500 sectors are trading higher, paced by the consumer discretionary (+1.5%), materials (+1.6%), information technology (+1.2%), financials (+1.2%), and industrials (+1.1%) sectors with gains over 1.0%.

Conversely, the energy sector (-2.2%) is seeing an outsized loss, as oil prices ($89.49, -1.82, -2.0%) cool off amid the prospects of an U.S.-Iran nuclear agreement that could allow Iran to export more oil. The real estate sector (-0.4%) holds a modest decline.

Encouragingly, the growth stocks haven’t been deterred by the higher rates. The Vanguard Mega Cap Growth ETF (MGK 235.28, +2.10) is up 0.9%, in-line with the Invesco S&P 500 Equal Weight ETF (RSP 157.29, +1.46, +0.9%).

Shares of Peloton (PTON 39.12, +9.35, +31.5%) are rising over 30%, picking up steam with the broader market, after announcing a CEO change and cost-cutting measures that investors hope will turn the company around or put it in a better position for a takeover. On a related note, Peloton issued below-consensus Q2 results and downside Q3 guidance.

Amgen (AMGN 242.34, +18.81, +8.4%), though, is having a more influential role following its better-than-expected earnings report. Shares of the Dow component are up 8%, while former Dow component Pfizer (PFE 51.53, -1.71, -3.2%) is down 3% on disappointing full-year guidance.

As an aside, the S&P 500 is retesting yesterday’s high (4521.86), so this could be a level to watch for sentiment reasons.

Reviewing today’s economic data:

  • The December Trade Balance Report showed a widening in the trade deficit to $80.7 billion (Briefing.com consensus -$79.6 billion) from an upwardly revised $79.3 billion (from -$80.2 billion) in November. December exports were $3.4 billion more than November exports while December imports were $4.8 million more than November imports.
  • The key takeaway from the report is that the Omicron variant didn’t seriously disrupt trade activity in December, although there were signs of a slowdown in China as U.S. goods exports there decreased by $2.2 billion.
  • The NFIB Small Business Optimism Index for January decreased to 97.1 from 98.9 in December.
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