Stock Market Update

[BRIEFING.COM] It was a somewhat lackluster session in the stock market. The S&P 500 (+0.1%), Dow Jones Industrial Average (+0.1%), and Nasdaq Composite (+0.3%) settled slightly higher than yesterday while the Russell 2000 outperformed, settling 1.0% higher.

Market breadth was positive, but there wasn't a lot of conviction on either side of the tape. Advancers had a roughly 3-to-2 lead over decliners at the NYSE and at the Nasdaq.

The lack of conviction today stemmed from a wait-and-see stance in front of the May Personal Income and Spending report tomorrow at 8:30 ET, which features the Fed's preferred inflation gauges in the form PCE and core-PCE price indexes.

Ongoing buying interest in the mega cap space played an integral role in index-level performance. Shares of Amazon.com (AMZN 197.85, +4.24, +2.2%) moved further into record territory after crossing $2 trillion in market cap. The Vanguard Mega Cap Growth ETF (MGK) logged a 0.3% gain.

Meanwhile, semiconductor-related names acted as a drag on the broader market after Micron's (MU 132.26, -10.13, -7.1%) earnings report. NVIDIA (NVDA 123.99, -2.41, -1.9%) was an influential standout from the space.

Some bank stocks traded higher the Fed's stress test showed that the 31 large banks subject to the test this year have sufficient capital. The SPDR S&P Bank ETF (KBE) closed 1.0% higher and the SPDR S&P Regional Banking ETF (KRE) showed a 1.1% gain.

Still, the S&P 500 financial sector fell 0.3% today.

Treasury yields settled lower in response to this morning's data and a stellar $44 billion 7-yr note sale. The slate of economic releases today included an upward revision to Q1 GDP, the highest level of continuing jobless claims since November 2021, and better-than-expected durable orders growth for May. 

The 10-yr note yield, at 4.33% shortly before 8:30 ET, settled at 4.29%, which is three basis points lower than yesterday. The 2-yr note yield, at 4.76% before 8:30 ET, settled at 4.72%.

• Nasdaq Composite: +19.0% YTD
• S&P 500:+15.0% YTD
• S&P Midcap 400: +5.1% YTD
• Dow Jones Industrial Average: +3.9% YTD
• Russell 2000: +0.6% YTD

Reviewing today's economic data:

• May Adv. Intl. Trade in Goods -$100.6 bln; Prior was revised to -$98.0 bln from -$99.4 bln
• May Adv. Retail Inventories 0.7%; Prior 0.7%
• May Adv. Wholesale Inventories 0.6%; Prior 0.2%
• Weekly Initial Claims 233K (Briefing.com consensus 238K); Prior was revised to 239K from 238K; Weekly Continuing Claims 1.839 mln; Prior was revised to 1.821 mln from 1.828 mln
  • The key takeaway from the report is the elevated level of continuing jobless claims, which suggests laid-off workers are facing longer wait times before finding a new job, which would be a symptom of a softening labor market.
• May Durable Orders 0.1% (Briefing.com consensus -1.2%); Prior was revised to 0.2% from 0.7%; May Durable Orders -ex transportation -0.1% (Briefing.com consensus 0.2%); Prior 0.4%
  • The key takeaway from the report is that new orders for nondefense capital goods excluding aircraft -- a proxy for business spending -- declined 0.6% month-over-month.
• Q1 GDP- Third Estimate 1.4% (Briefing.com consensus 1.3%); Prior 1.3%; Q1 GDP Deflator - Third Estimate 3.1% (Briefing.com consensus 3.1%); Prior 3.0%
  • The key takeaway from the report is that it is dated (we're just days away from the end of Q2) so its impact should be limited; however, the slowdown in personal spending is noteworthy in light of more anecdotal evidence in the interim that suggests consumers, in aggregate, are reining in their discretionary spending.
• May Pending Home Sales -2.1% (Briefing.com consensus 2.3%); Prior -7.7%

Friday's economic calendar features the Fed's preferred inflation gauge in the form of PCE Price Indexes in the May Personal Income and Spending report. Other data tomorrow include:

• 9:45 ET: June Chicago PMI (prior 35.4)
• 10:00 ET: Final June University of Michigan Consumer Sentiment (Briefing.com consensus 65.6; prior 65.6)