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The market continued its recent split, with cyclical sectors such as energy (+3.0%) and financials (+1.5%) building upon yesterday's gains while mega-cap technology and tech-esque stocks receded again.
President Joe Biden on Tuesday announced the release of 50 million barrels of oil from the nation's strategic reserves to rein in high gas prices. And yet, U.S. crude oil futures jumped 2.3% to $78.50 per barrel, buoying most of the energy sector, especially exploration and production plays such as Occidental Petroleum (OXY, +6.4%) and EOG Resources (EOG, +5.8%).
Michael Reinking, senior market strategist for the New York Stock Exchange, lays out three potential reasons for the counterintuitive move:
"First, there is the 'sell the rumor, buy the news'; second, there is the belief that this will not have a long-term impact on prices; and lastly, there is some concern that this could lead to a showdown with OPEC+, who warned there would be a response if this action was taken," he says.
Also Tuesday, IHS Market's flash purchasing managers' index for November showed slowing but still strong private-sector growth in November, with its reading declining to 56.5 from 57.6 in October. (Any reading above 50 indicates expansion.)
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Rising Treasury rates – the 10-year T-note's yield climbed to just under 1.67% – helped keep financials such as Bank of America (BAC, +2.6%) and JPMorgan Chase (JPM, +2.4%) aloft. But they weighed on tech names such as Advanced Micro Devices (AMD, -1.7%) and Adobe (ADBE, -1.3%).
The end result was a 0.6% gain to 35,813 for the Dow Jones Industrial Average, and a more modest 0.2% improvement to 4,690 for the S&P 500. Tech weakness, and a 4.1% shot to Tesla (TSLA), pulled the Nasdaq Composite 0.5% lower to 15,775.
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Other news in the stock market today:
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Kyle Woodley was long AMD and TSLA as of this writing.
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