[BRIEFING.COM] The stock market continues to push higher, supported by easy monetary policy expectations from central banks and lower sovereign bond yields. The S&P 500 set a new all-time high (2956.20) in early action, but buying interest has since cooled off amid geopolitical angst and a sense that the market may have gotten overextended. The S&P 500 is currently up 0.5%.
The Dow Jones Industrial Average is up 0.5%, the Nasdaq Composite is up 0.4%, and the Russell 2000 is up 0.2%
The Bank of England and the Bank of Japan both left their key policy rates unchanged on Thursday, following the Fed's decision yesterday. Japan also struck a dovish tone after it indicated it will likely leave its key policy rate unchanged until spring 2020. For good measure, Bank of Australia Governor Philip Lowe said that it's not unrealistic to expect another rate cut.
Expectations that rates could move lower has put additional pressure on bond yields, which remains a positive consideration for risk assets. The benchmark 10-yr yield is down four basis points to 1.99%. This general optimism sent all 11 S&P 500 sectors into positive territory in early morning action, briefly lifting the S&P 500 up 7.7% since June 3.
Escalating tensions in the Middle East has also been a talking point today. Iran shot down a U.S. military drone, which President Trump said was a "very big mistake." That news has contributed to higher oil prices ($56.78/bbl, +$2.81, +5.2%), which have fueled the gains in the S&P 500 energy sector (+1.9%).
When asked if the U.S. would strike Iran, President Trump said, "you'll soon find out." Stocks had already been on a steady retreat from prior highs, but the president's response caused a brief move lower. CNBC followed up, saying that President Trump believes it could have been a mistake.
Currently, most S&P 500 sectors still trade higher, led by energy (+1.9%), information technology (+0.9%), and industrials (+0.8%). The financials (-0.3%) and utilities (-0.1%) sectors are the lone sectors in negative territory.
In corporate news, Slack (WORK 40.89, +14.88, +57.0%) opened for trading at $38.50 per share after setting its reference price at $26 per share. Oracle (ORCL 56.62, +3.94, +7.5%) has impressed investors with upbeat quarterly results, helping push the stock up over 7%. Carnival (CCL 47.86, -4.97, -9.4%) has disappointed investors with weak full-year guidance.
Reviewing today's batch of economic data:
- Initial claims for the week ending June 15 decreased by 6,000 to 216,000 (Briefing.com consensus 220,000). Continuing claims for the week ending June 8 decreased by 37,000 to 1.662 million.
- The key takeaway from the report is that it covers the period in which the survey for the June employment report was conducted. Accordingly, the low level of initial claims should set an expectation for a solid gain in nonfarm payrolls for June.
- The Conference Board's Leading Economic Index was unchanged in May (Briefing.com consensus +0.1%) following a downwardly revised 0.1% increase (from 0.4%) in April.
- The key takeaway from the report is that it reflects an environment of slower economic growth unfolding in the second quarter. According to the Conference Board, the Leading Economic Index increased 0.3% for the six-month period ending May 2019, versus 2.2% growth during the previous six months.
- The Q1 Current Account Deficit was $130.4 billion (Briefing.com consensus -$125.0 billion) versus a downardly revised $143.9 billion (from -$134.4 billion) for the fourth quarter.
- The Philadelphia Fed Index fell to 0.3 (Briefing.com consensus 11.5) from 16.6 in May.