Risk sentiment in equities was strong by midday Wednesday, as earnings were rolling in.
The S&P 500 rose 0.9%, with the tech-heavy Nasdaq leading the way, up 1%. The 10-Year Treasury yield has been pressured of late and was down to 0.58% by midday, and if bond investors are truly leading stocks investors, stocks may be challenged for the near-term. Yields fall when prices rise.
FANG stocks were up more than 1%, even as Congress grills executives of those companies. Investors, for now, are not worried about regulation on anti-trust-related claims.
Semiconductors rose considerably, with the iShares PHLX Semiconductor ETF (SOXX) - Get Report up 1.2%. Advanced Micro Devices (AMD) - Get Report posted an exceptional quarter and raised revenue growth guidance for 2020 to 32% from a proves range of between 20% and 30%. This is a strong signal for chips and their end markets like electronics, gaming and data center, but analysts do say that AMD is also taking market share from Intel (INTC) - Get Report. AMD rose 12%.
This morning, some cyclical sectors were down, but my midday, all were up. Large cap consumer discretionary rose more than 1% after Starbucks (SBUX) - Get Report posted a better-than-expected pandemic-plagued fiscal year second quarter and issued strong 2020 guidance relative to analyst expectations. Starbucks is making it clear the second quarter was by far the worst quarter during the pandemic and the stock rose 3.6%. Oil, banking, industrials and materials all rose considerably as companies largely beat earnings ex-expectations.
The muted inflation expectations, as seen by the price recent action in the treasury market, does signal economic bearishness stemming from rising virus cases, paused state reopenings and questions over the sufficiency of the recent fiscal stimulus bill. Cyclical value stocks had corrected for sometimes dating back to mid June and were depressed into earnings.
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