Market Moves

The S&P 500 index hesitated its upward march from the end of last week, closing a fraction of one percent lower. Meanwhile, the Nasdaq 100 and Russel 2000 indexes closed mildly higher (compared to their opening price) for the day. This outcome seems to portend the possibility that stocks will eventually fluctuate higher in the days to come, but not without worried investors creating drama along the way. 

One interesting signal of how investors are re-prioritizing their choices nowadays comes from observing a comparison chart of two particular market sectors and the exchange-traded funds (ETFs) that track them. These funds are triple-leveraged and based on the consumer discretionary sector (WANT) and the consumer staples sector (NEED), respectively. The chart below shows that, as of late, investors are placing what they need above what they want. This conservative approach is consistent with a nervous market climate.

Chart showing the performance of the consumer discretionary and consumer staples sectors

Utility Sector Maintains its Relative Strength

The roller-coaster action shown by the S&P 500 (SPX) demonstrates that investors are worried about where stocks will end up next. This likely explains why shares of utility stocks have risen apace year to date. Worried investors tend to prefer dividend-paying stocks such as those found in the utility sector. The sector is tracked by ETFs such as the Utilities Select Sector SPDR ETF (XLU). The chart below compares that ETF with several of the stocks that make up the holdings within the fund. 

Chart showing the performance of the utility sector ETF and major components

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Disney Share Prices Bouncing Off Support

The price action for shares of The Walt Disney Company (DIS) has been in a sideways range for several months, but right now, the shares are near their lowest point in that range. Like many other bellwether stocks, Disney's shares may be poised to rise from support. This assumes that many issues troubling investors, such as the trade talks, the impeachment effort, the budget deficit, oil prices, and so forth, will generally find acceptable resolutions before long. That's a pretty hefty assumption. 

Chart showing the share price performance of The Walt Disney Company (DIS)

The Bottom Line

U.S. stock indexes hesitated in their rebound action as the volatility index also held at elevated levels and commodities dropped lower. Utility stocks fell but not enough to dent the significant uptrend they've had all year so far. Indications are that investors may resume buying some stocks, especially those near support, such as Disney. If not, then the downward trend will resume its strong move.

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