Stock gains accelerated Wednesday, as Lowe’s’ soli earnings report painted a positive picture for the consumer.
All three major U.S. indices rose, with the S&P 500 up as much as 1.6%. The 10 year treasury yield slipped to 0.7%, a slight risk-off signal, as interest rates remain pressured by design. .
Lowe’s (LOW) beat estimates on revenue and earnings, with revenue rising 11% year-over-year. The company said it is deemed an essential business, enabling it to stay open, driving some foot traffic. But it’s revenue result benefitted significantly from a surge in digital sales. All in, this underscores that, with support from fiscal spending, the consumer is able to spend when people get out of the door.
The S&P 500 Consumer Discretionary index performed well, but not as well as the broader market. The consumer index rose 1.3.%. But the best scaled and most solid consumer discretionary companies outperformed. Nike (NKE) and McDonalds (MCD) both rose roughly 2%.
And lockdowns are indeed easing. New York wants to open in June. New York has one of the fastest declines in new virus infections. Virginia Beach may reopen at 50% capacity.
Crude oil rose 3% to almost $33 a barrel, a huge development for distressed oil producers. The (XLE) , an energy ETF, rose more than 3%.
The market's biggest fear: a second wave of virus infections from a premature reopening.
Along with several bearish signs in the market, Dave Iben, chief investment officer of Kopernik Global Investors, a $3.1 billion equity fund manager, told TheStreet “we’ve done a lot more selling than buying” in May. His firms cash holdings have moved up to 10%, after having accumulated full positions in high volatility oil and gas stocks that have plunged in 2020.