Midday Market Update: Two Forces Bringing Stocks Higher

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Stocks were rising by midday Monday, as two forces took hold.

All three major U.S. indices were up by midday, after the S&P 500 had fallen 0.5% in early trading. The S&P 500 rose to 0.5% by midday, though, and the 10-Year Treasury yield slipped to 0.69%, less severe than the fall to 0.68% in the morning, signaling slightly less risk-off sentiment.

Negatively, the 5-day moving average of daily coronavirus cases is up to 25,000 from 17,000 a few weeks ago, according to Johns Hopkins data. That has been holding the market back, but investors are worrying less about the virus in the past few days, according to some on Wall Street. Meanwhile, equity exposure from retail and larger investors are below historical averages, suggesting more near-term upside to stocks from here.

Force number one on the major indices is big tech, which has a heavy weighting on the S&P 500. Stay-at-home and work-from-home innovators are seeing their share prices rise, which speaks to some level of cyclical risk aversion in the market. Netflix NFLX rose 1.7%, Amazon AMZN rose 0.8%, Microsoft MSFT, rose 2% and Nvidia NVDA rose 1.8%.

Force number two is that cyclical stocks were losing less steam than they were in the morning. Consumer discretionary, oil and bank stocks were all down 1% in the morning and were closer to flat by midday.

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