Stock Market Update

[BRIEFING.COM] The stock market is trading lower despite another cooler-than-expected inflation reading in the form of the May Producer Price Index this morning, which sent Treasury yields lower again. The S&P 500 (-0.1%) and Dow Jones Industrial Average (-0.5%) are lower while the Nasdaq Composite trades near its prior close.

The 10-yr note yield is down eight basis points to 4.22% and the 2-yr note yield is down three basis point to 4.67% following the PPI report and a weaker-than-expected initial jobless claims report. 

Many stocks are participating in today's downside moves, leading the equal-weighted S&P 500 to trade 0.5% lower. Eight of the 11 S&P 500 sectors are trading down with industrials (-1.0%) and energy (-0.9%) showing the largest declines, followed by communication services (-0.8%) and health care (-0.5%). 

The information technology sector, which comprises 32% of the index, trades up 0.9% today thanks to a big move in Broadcom (AVGO 1675.75, +180.24, +12.0%) following its better-than-expected earnings report, outlook, and 10-for-1 stock split announcement. NVIDIA (NVDA 127.84, +2.64, +2.1%) and Super Micro Computer (SMCI 864.75, +90.25, +11.7%) are also contributing to the sector's performance, moving up in sympathy with AVGO.

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.