Market Recap: Monday Aug. 23

James Bruderman, 1879 Advisors Vice Chairman, and Michael Antonelli, a market strategist at Baird PWM, help Yahoo Finance break down the day of trading.

Video Transcript

SEANA SMITH: Stocks climbing as we kick off a new week, reopening stocks, getting a boost after the FDA approved the Pfizer vaccine. [INAUDIBLE] across the board with the Dow still up over 200 points, although well off the highs of the day. We want to bring in James Bruderman. He's the 1879 Advisors vice chairman. And Michael Antonelli, Baird BMW's market strategist. Michael, let me start with you. The gains that we're seeing today, a little bit of a bounce back following the weak activity last week. What do you make of this move higher.

MICHAEL ANTONELLI: I think we're getting kind of over the Delta variant. I know we've been talking about it a lot recently. You guys were just talking about it on the previous segment. I think the Delta variant's peaking. I really do think it's peaking. You see that data in the South. I think the market's reacting to that. I think it's starting to think a little bit further past the Delta variant. And we have some great earnings. We've had great earnings. We've got stocks that are leading the way like Microsoft, and Facebook, and Apple.

So I think some of the concerns that were weighing on us over the past month or so are shifting away from Delta maybe more towards the fed I guess.

SEANA SMITH: This certainly does seem to be the case today. Again, the Dow up 211 points heading into the bell. S&P up 8/10 of a percent, NASDAQ up 225.

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- All right. We have the closing bell on the first day of the trading week in this month of August. And let's see where we're going to finish things up. The Dow is going to be up 250 points. The S&P 500 will close up 37 points. But it won't be a record close. Needed to settle at 4,480 to hit the record close, although we did hit an intraday high of 4,489. Then the NASDAQ up about 227 points, 14,942. I'll wait till Jared to confirm. I believe that is a record close for the NASDAQ. Real quick too, want to let you know regarding sector action today, we saw big gains in energy.

So let's go back to the panel to talk about this. And let me bring you into this discussion, James. Because when we see crude oil, it was last week down. At least WTI was, what, about $62 a barrel? Today it's up around 65 and some change. When we heard Michael talking about maybe people are kind of over the Delta variant, what we're witnessing at least in energy indicate, look, the economies globally are going to start picking up. Get ready.

JAMES BRUDERMAN: I think so. I think some of the pricing in crude is obviously a little bit of geopolitical tension. Certainly some of the weakness we saw last week was probably due to the COVID variant. But quite frankly, we agree that COVID should play out sometime early in the fourth quarter. And we think on a global level that everything's in place for a continued bullish sentiment for the market, and quite frankly, for the economy as well.

SEANA SMITH: Michael, in terms of what's going to lead us higher, if you take a look at the action today, the reopening trade's getting a boost. We were just talking about energy being a leader, we're actually seeing gains in a number of places. Some of the big tech names, Amazon posting its biggest daily gain that we've seen in just about six weeks. But if you were positioned now here for the future, I guess where are you seeing the most opportunity?

MICHAEL ANTONELLI: I still think we stick with the stuff that's been working. So I still like some big tech names. I still think that they've proven they can work not only in a COVID world, but they can work in a reopening type environment. I still think there's great consumer names out there. We have an economy where consumer balance sheets are extremely healthy. Consumers are flush with cash. We still have child tax credit payments coming through. So I still want to be in some consumer discretionary names. That sector still has a lot of runway left. And then housing, we talk about housing a lot.

The housing sector's still white hot, maybe cooling down a little bit. But still a white hot sector where you could play not only homebuilders, but you could play consumer type names in that sector. So I still think that the reopen trade is kind of bouncing off of some oversold levels. But I still think that those three sectors have some better meat on their bones right now.

- James, you pointed out that you like retail as part of the back to normal. What exactly is normal these days?

JAMES BRUDERMAN: That's a really fantastic question. I mean, what's normal and what's the new normal? We've had a great run in a lot of cyclicals because quite frankly the economy tanked a year plus ago. And with all the liquidity that the Fed gave us, there was a fantastic bounce back. I'm hesitant to call it a reopening trade. But we saw this huge run in cyclicals. And now that the economy in the future is looking a little bit clearer in terms of a back to normal levels of economic growth, back to normal levels of earnings, well, we think that back to normal looks a lot like what companies are poised well on a secular basis to continue to do well.

And we like retail with that in mind. We like, I'm sorry, integrated technology also. And we also like consumer staples. We think there's a lot of room for productivity improvement on the staple side of the equation.

SEANA SMITH: Michael, what about what's going on in housing? Because we got the housing numbers out this morning, home sales rising for the second month in a row, although it was only a 2% increase on year over year basis. But still, we're seeing this craziness that we've seen over the last 16 or 17 months in the housing market continue to play out. I guess how are you viewing the activity there? And are there any signs that that could be something troubling here for the markets going forward?

MICHAEL ANTONELLI: So I talk about this a lot with my friend Logan [? Botachami ?] on Twitter. He's another kind of housing guy. I think housing is a multi-year tail wind to it. I don't see housing as this real red warning sign. Millennials, low interest rates, great consumer balance sheets. If you look at mortgage originations, some of the highest FICO scores in history. I think housing, plenty of runway left. When I look at housing, I want it to actually calm down a bit. I don't want a white hot housing market. We don't want to see housing soar higher. That's actually-- homeowners might like it. But that's actually bad for the economy and the market in general.

So I still think it's got a long tailwind. I still think there's a lot of demographics in it. And to me, it's not a bubble. A bubble is kind of people over their skis with too much leverage who can't afford the debt. And I just don't see that in housing right now. So let's keep watching. Months of supply, that's what we want to focus on. Get that back to a healthy level. Maybe these price gains moderate. And this is years of-- we're talking about this for years.

- James, I'm curious if I could get you to react to what Michael just said to us about housing. Because I know that among your clients, it's inflation, inflation and employment that they're paying attention to. And if interest rates do by the way start to go up, won't we see some at least slow down, if not correction in housing prices?

JAMES BRUDERMAN: Well, we do see interest rates going up. That's for sure. But we don't see inflation as being anything of a runaway inflation we saw in the '70s. And we think higher interest rates are part of a healthy yield curve. And by higher interest rates, a 10 year at 2% is, in my opinion, a sign of a productive economy, and probably where rates ought to be. So we don't see that kind of move in interest rates championing the housing market. We also think the housing market's got some legs to it. And we think that companies that service homeowners have got a lot of runway ahead of them.

SEANA SMITH: Michael, what do you make of the action that we've seen in the 10 year? Because today, off just a bit, it's right around 1.25%, we haven't really moved much. We've been pretty range bound recently. What's it going to take? Are you expecting a move either to the upside, or potentially to the downside anytime soon?

MICHAEL ANTONELLI: Probably wait for the fed. I mean probably wait for the fed. Jared made a great point about going virtual what that might mean for policy. That wouldn't strike me as-- I personally think taper is going to get pushed out. I don't think you see any talk about tapering in this year. So I think the bond markets is probably a no man's land for a while until you get a little more information from the fed, certainly the virtual Jackson Hole. So it doesn't surprise me. It really doesn't, kind of where we are right now, why it's just going nowhere. I think it still needs to hear something from the chairman and from how the entire board is thinking about the economy and the risks to it right now.

So it's going to be sideways for a while I believe.

- James, when you talk about geopolitical risks, we seem to have despite the humanitarian catastrophe in Afghanistan, these markets don't seem to be upset by that. It seems as if the only thing that would be a geopolitical risk to these markets would be some kind of confrontation with China. And I don't think anybody really wants that to happen. So is there-- is this something we can safely put in the rearview mirror?

JAMES BRUDERMAN: Well I don't know about that. I do think that our failure in Afghanistan potentially emboldens not just the Chinese, but the Palestinians who've have some-- Hezbollah had some comments over the weekend with regard to the US resolve in Israel, for example. And quite frankly, looking closely at Taiwan, it certainly doesn't help our position with them, or with a lot of our allies if they feel that there's going to be considerable weakness in the US response to protecting them and their democracies.

And I think that could easily weigh in on some of the global trade.

SEANA SMITH: All right. James Bruderman, 1879 Advisors vice chairman. And Michael Antonelli of Baird, a market strategist there. Thanks to you both so much for taking the time to join us.