Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.2%) and Nasdaq Composite (+0.3%) added to their record closing highs today, but market breadth was negative and other major indices closed with losses. The Dow Jones Industrial Average fell 0.2% and the Russell 2000 settled 0.9% lower. 

Some normal consolidation efforts drove the underlying negative bias following a big run in many stocks. Decliners led advancers by a nearly 2-to-1 margin at the NYSE and at the Nasdaq.

Dropping market rates and solid gains in some mega cap stocks were not enough to offset the downside bias. 

The 10-yr note yield fell six basis points to 4.24% and the 2-yr note yield declined six basis points to 4.69%. This price action was in response to a cooler-than-expected inflation reading in the form of the May Producer Price Index, a weaker-than-expected initial jobless claims report, and today's $22 billion 30-yr bond reopening, which was met with solid demand.

Broadcom (AVGO 1678.99, +183.48, +12.3%) was a standout from the mega cap space following its better-than-expected earnings report, outlook, and 10-for-1 stock split announcement. NVIDIA (NVDA 129.61, +4.41, +3.5%) logged a solid gain in sympathy. 

Super Micro Computer (SMCI 871.10, +96.36, +12.4%) also registered an outsized gain in sympathy with AVGO. Gains in the aforementioned names boosted the information technology sector (+1.4%), which was the top performer among the 11 sectors. The rate-sensitive real estate sector (+0.5%) showed the next largest gain, benefitting from the drop in market rates.

• Nasdaq Composite: +17.7% YTD
• S&P 500:+13.9% YTD
• S&P Midcap 400: +5.5% YTD
• Dow Jones Industrial Average: +2.5% YTD
• Russell 2000: +0.6% YTD

Reviewing today's economic data:

• Weekly Initial Claims 242K (Briefing.com consensus 224K; Prior 229K; Weekly Continuing Claims 1.820 mln; Prior was revised to 1.790 mln from 1.792 mln
• The key takeaway from the report is the upward drift in jobless claims, as that will be construed as a loosening of labor market conditions that fits the Fed's script for eventually cutting rates.
• May PPI -0.2% (Briefing.com consensus 0.1%); Prior was revised to 0.1% from 0.5%; May Core PPI 0.0% (Briefing.com consensus 0.3%); Prior 0.5%
  • The key takeaway from the report is that it will factor favorably in the PCE Price Index, which is the Fed's preferred inflation gauge. In other words, it is a report that is pleasing in the market's mind as providing a stepping stone to a Fed rate cut.

Friday's economic calendar features:

• 08:30 ET: May import prices (prior 0.9%) and nonfuel import prices (prior 0.7%); May export prices (prior 0.5%) and nonagricultural export prices (prior 0.7%)
• 10:00 ET: Preliminary June Univ. of Michigan Consumer Sentiment (Briefing.com consensus 73.0; prior 69.1)