[BRIEFING.COM] The major averages trade at their best levels of the day at midday, putting the Dow (+0.6%), Nasdaq (+0.4%) and the S&P 500 (+0.2%) on track to end the day at fresh record highs.
Equity indices climbed out of the gate, showing little concern over China's June trade figures, which showed a larger than expected trade surplus of $50.98 bln (expected surplus of $45.20 bln), but also pointed to the fifth decrease in imports (-7.3% yr/yr) over the past six months.
The Dow Jones Industrial Average started the day ahead of its peers for the second consecutive day, and it continues holding the lead at this juncture. Meanwhile, the S&P 500 sits closer to its flat line, but the modest advance has been supported by gains in eight out of eleven sectors.
Cyclical groups like industrials (+1.4%) and consumer discretionary (+1.0%) have shown relative strength since the start. Industrials have been boosted by a strong showing from transport stocks, as the Dow Jones Transportation Average climbs 2.1%. Trucking companies are pacing the group's advance, with Landstar System (LSTR 108.71, +3.82, +3.6%), Ryder (R 56.70, +2.31, +4.3%), and JB Hunt (JBHT 92.96, +5.20, +5.9%) rising between 3.6% and 5.9%.
The consumer discretionary sector has drawn strength from retailers, as the SPDR S&P Retail ETF (XRT 43.33, +0.85, +2.0%) climbs to its highest level since July 1.
On the downside, the health care sector (-1.6%) has lagged since the opening bell. The early weakness was owed to disappointing Q2 guidance and a FY19 guidance cut at Illumina (ILMN 307.17, -56.49, -15.5%) while a Bloomberg report that Johnson & Johnson (JNJ 134.07, -6.04, -4.3%) may face a criminal investigation into the company's knowledge of undisclosed health risks associated with the company's baby powder sent the sector to a fresh low.
Treasuries hover near their flat lines after reclaiming their morning losses. The 10-yr yield is little changed at 2.12%.
Today's economic data was limited to June PPI:
- The index for final demand increased 0.1% m/m in June (Briefing.com consensus +0.0%), held back by a 3.1% drop in the index for final demand energy, while the index for final demand, excluding food and energy, rose 0.3% m/m (Briefing.com consensus +0.2%). Those readings left the index for final demand up 1.7% yr/yr, versus 1.8% yr/yr in May. That is the lowest 12-month change since January 2017. Core PPI, however, was up 2.3% yr/yr, which was unchanged from May.
- The key takeaway from the report is that Producer Price Index for June, like the Consumer Price Index for June, didn't exactly support the case for a 50-basis points cut in July. Some might argue, too, that it didn't event support the case for a 25-basis points cut in July, yet that's almost a moot (and mute) argument given the subtext of Mr. Powell's remarks in his semiannual monetary policy testimony.