Cyclical stocks lead market higher
Cyclical, value, and small-cap stocks are outpacing most growth stocks today, contributing to the 1% gains in the Dow Jones Industrial Average (+1.1%) and Russell 2000 (+1.0%). The S&P 500 is up 0.5%, and the Nasdaq Composite is up 0.3%. Within the S&P 500, the materials (+1.9%), financials (+1.4%), industrials (+1.6%), and energy (+1.2%) sectors are in the leadership positions, while the defensive-oriented utilities (-1.4%), real estate (-0.6%), and consumer staples (-0.3%) sectors trade lower. There's a lot of good news to cover today that has bolstered the outperformance of these economically-sensitive sectors, an occurrence otherwise known as a recovery/reopening trade.  Lawmakers have reportedly made progress on coronavirus relief talks, Walt Disney (DIS 128.24, +10.96, +9.3%) beat earnings estimates and reported strong subscriber numbers, and Novavax (NVAX 172.94, +15.82, +10.1%) announced a promising-sounding update on a Phase 1/2 trial for its COVID-19 vaccine candidate for healthy adults ages 18-59. In addition, a better-than-expected ISM Non-Manufacturing Index for July (58.1% actual vs. 55.2% Briefing.com consensus) has outweighed a disappointing ADP Employment Change report for July (167,000 actual vs. 1.600 mln Briefing.com consensus). In the growth stock space, Twilio (TWLO 275.04, -8.72, -3.1%), Beyond Meat (BYND 133.54, -8.71, -6.1%), and Nikola (NKLA 35.31, -3.50, -9.0%) are each trading lower following their earnings reports, as are Telodoc (TDOC 214.31, -35.11, -14.1%) and Livongo Health (LVGO 203.16, -45.91, -18.4%) after agreeing to merge in a $18.5 billion cash-and-stock deal.Elsewhere, gold futures ($2047.10, +26.10, +1.3%) continue to climb to fresh record highs, while longer-dated Treasuries are giving back yesterday's gains. The 10-yr yield is up three basis points to 0.55%. The U.S. Dollar Index is down 0.6% to 92.80. Reviewing today's economic data:The ISM Non-Manufacturing Index increased to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June. This was the third straight monthly improvement and the highest reading for the index since February 2019.The key takeaway from the report is the recognition that the Employment Index fell even as business activity improved some, which suggests a reticence on the part of employers to bring on new employees given the heightened state of uncertainty about the demand outlook.The Trade Balance report for June showed a narrowing of the trade deficit to $50.7 billion (Briefing.com consensus -$49.3 billion) from a downwardly revised $54.8 billion (from -$54.6 billion) in May.The key takeaway from this more dated report is that export and import activity increased in June as economies were reopening following the suppressed activity from March to May.The ADP Employment Change report for July estimated 167,000 jobs were added private-sector payrolls (Briefing.com consensus 1.600 million), which was well below expectations.The June trade balance report showed a deficit of $50.7 billion (Briefing.com consensus -$53.0 billion). The May deficit was revised up to $54.8 billion from $54.6 billion.