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“The sports page records people’s accomplishments, the front page usually records nothing, but man’s failures.” – Barbara Walters

Morning stock market summary

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Equity futures remain in modestly positive territory even after a slug of economic data that was more of the same.  Initial and continuing jobless claims came in slightly ahead of forecasts, Housing Starts and Building Permits were both weaker than expected, the Philly Fed Manufacturing report missed forecasts, and the only area of strength was in Import Prices.  Essentially, every data point went the opposite of what you would want to see in a strong economy. To be fair, outside of Housing Starts and Import Prices, the deviation from consensus forecasts wasn’t very large.

The snapshot below from our Trend Analyzer shows the performance of each S&P 500 Sector SPDR ETF so far this year and where each one is trading relative to its trading range.  The ETF for the Utilities sector (XLU) tops the list with its gain of over 15% on the year.  Even more amazing is that while no other ETF closed more than 4.2% above its 50-day moving average (DMA) yesterday, XLU finished more than 10% above its 50-DMA. Outside of one day in April 2022, the last time the sector traded further above its 50-DMA was in 2003!

The chart for XLU looks parabolic with a heavy helping of green. At one point last week, the sector closed higher than it opened in 16 out of 17 trading days, and on a 15-day rolling basis, the only time there was anything near that level of consistently higher closes than opens over three weeks occurred in January 2020.

With the sector performing so well lately and outperforming the S&P 500, you would think finding winners would be like shooting fish in a barrel, but that’s not the case. The chart below shows the YTD performance of the 31 stocks in the S&P 500 Utilities sector, and outside of three stocks, there hasn’t been much in the way of outstanding performance in the sector. While Vistra (VST), Constellation Energy (CEG), and NRG Energy (NRG) have all surged more than 60% this year, only five other stocks in the sector have outperformed the S&P 500 YTD.  An additional way to show the disparity in performance this year can be seen in the fact that stocks in the sector have rallied an average of 16.2% this year, while the median gain has been just 8.1%.

Along the lines of Barbara Walters’s comment above, while VST, CEG, and NRG would be on the back page of the NY Post under a headline like “Nuking the Competition”, more stocks from the Utilities sector would likely find themselves on the front page under a headline like “Dim Bulbs”.

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