Daily Insights
S&P 500 Index opens lower following Monday rally
Vaccine-driven gains may be increasingly priced in as the US rally fizzled in international markets overnight and US markets are giving back some of Monday’s gains in early Tuesday trading.
- S&P 500 climbed 1.2% Monday after a report of strong preliminary data for a second COVID-19 vaccine.
- Similar to last week’s vaccine-driven rally, small caps outperformed large, and value-style stocks outperformed growth.
- The MSCI Asia Pacific Index ticked 0.2% higher overnight, lagging US gains, although the Shanghai Composite saw modest losses.
European markets are lower at midday.
Can the 10-year yield continue higher?
Since briefly hitting 50 basis points (.5%) in early August, the yield on the 10-year Treasury note has steadily increased, reaching a high of 97 basis points (.97%) last week. Looking at the technicals, the move could have more room to run. Find out more in today’s LPL Research blog.
Technical update
The S&P 500 and Russell 2000 indexes both set record highs for the second trading day in a row on Monday, while the Dow made its first record high since February. The recent breakouts and strong breadth over the last month are unequivocally bullish; however, both indexes are creeping toward overbought territory based on the common momentum indicator RSI-14. Overbought conditions can signal caution in the very short term, but ultimately they’re another positive sign for investors looking out over the next few months.
COVID-19 news
Monday the seven-day average of new US COVID-19 cases eclipsed 150,000 for the first time—a 33% weekly increase. The uptrend in hospitalizations has been slightly more gradual, with the seven-day average 22% above the prior week’s level (source: COVID Tracking Project).
- Iowa implemented a limited mask mandate and imposed limits on gatherings.
- California reinstituted bans on many indoor businesses.
- Michigan ordered a three-week partial shutdown.
Oregon, Washington, and New Jersey tightened curbs.
LPL Research in the Media
LPL Research Equity Strategist Jeff Buchbinder was quoted in MarketWatch.
LPL Research Chief Market Strategist Ryan Detrick was quoted in Barron’s (subscription required to access).
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