fundamental News - SP500

While tech stocks have led much of the stock market recovery from the March crash, the energy and financial sectors have lagged. However, today's 53-point gain by the S&P 500 Index (SNPINDEX:^GSPC), good for a strong 1.6% move higher, was driven by the laggards; the Energy Select Sector SPDR ETF (NYSEMKT:XLE) and Financial Select Sector SPDR ETF (NYSEMKT:XLF) gained 2.6% and 2.3%, respectively.

Laggards leading the way today were oil producers Devon Energy (NYSE:DVN), and Diamondback Energy (NASDAQ:FANG) up 11.1% and 5.3%, respectively, while financials including asset manager Invesco (NYSE:IVZ), insurer Lincoln National, and regional bank Regions Financial (NYSE:RF) shares led the sector with 6.3%, 4.7%, and 4.6% respective gains. Boeing (NYSE:BA), another laggard in a struggling industry, also had a good day, with shares up 6.4% on expectations the 737 Max is set to return to the skies soon.

On the downside, there's not a lot to report; almost 95% of S&P 500 stocks gained value today, and the worst performer, Westrock, was down only 2.3%. Only three more S&P components lost more than 1% on a day when the sentiment was widely positive.

Merger news driving oil stocks higher

Devon's sharp move higher today came following news that it had agreed to join with fellow independent oil producer WPX Energy (NYSE:WPX), in a merger that would create a $12 billion combined business. Investors are bullish on the deal, sending WPX shares up 16%, since it the combined scale of the two would result in significant savings, allowing it to break even on oil production at $33 per barrel.

Investors are also optimistic that this is a signal that more merger and acquisition deals could happen soon in the deeply troubled oil patch. Devon and WPX are two of the better-run independent producers, and the merger should help them be even more competitive against global heavyweights if oil prices remain depressed for an extended period of time. Investors are hopeful that other oil companies could find partners to combine with, or opportunities to begin selling off assets to clean up balance sheets that have become bloated with debt.

Financials move higher on post-COVID recovery hopes

While the reality is that the coronavirus pandemic is far from over, there remains optimism that medical help is on the way, and hopefully sooner rather than later. While it's debatable exactly what "sooner" really means, eventually, the post-COVID recovery will indeed happen. And historically, cyclical businesses like banks, which struggle more during a downturn, have been outperforming investments during the recovery cycle.

Source : investing