Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.5%) and Nasdaq Composite (+0.9%) pushed further into record territory on this holiday-shortened session. The Russell 2000 (+0.1%) and S&P Mid Cap 400 (+0.3%) also closed with gains. The price-weighted Dow Jones Industrial Average (-0.1%) closed slightly lower than yesterday due to a decline in its top weighted component, United Healthcare (UNH 489.89, -8.35, -1.7%).

Solid gains in the mega cap space had an outsized impact on index gains, but many other stocks participated in upside moves. NVIDIA (NVDA 128.28, +5.61, +4.6%), Broadcom (AVGO 1729.22, +71.74, +4.3%), Tesla (TSLA 246.39, +15.13, +6.5%), Apple (AAPL 221.55, +1.28, +0.6%), Microsoft (MSFT 460.77, +1.49, +0.3%), and Alphabet (GOOG 187.39, +0.78, +0.4%) were standouts in that respect. 

The action in some of the aforementioned names propelled the S&P 500 information technology sector to the top of the leaderboard among the 11 sectors, up 1.5% for the day. The materials (+0.8%) and utilities (+0.6%) sectors were also top performers.

The health care sector (-0.7%) saw the largest decline due to losses in UNH, Eli Lilly (LLY 898.10, -8.61, -1.0%), and others.

A drop in market rates created an upside catalyst for stocks. The 10-yr note yield is down nine basis points to 4.35% and the 2-yr note yield is down four basis points to 4.70%. The Treasury market will close at 2:00 p.m. ET.

This price action in Treasuries thus far is in response to this morning's weaker-than-expected economic data. Briefly, the ADP Employment Change Report reflected slowing growth in payrolls and the ISM Non-Manufacturing Index reflected a contraction in service sector activity (i.e. below-50 reading).

As a reminder, markets are closed tomorrow for Independence Day.

• Nasdaq Composite: +21.2% YTD
• S&P 500: +16.1% YTD
• S&P Midcap 400: +4.9% YTD
• Dow Jones Industrial Average: +4.3% YTD
• Russell 2000: +0.5% YTD

Reviewing today's economic data:

• Weekly MBA Mortgage Applications Index -2.6%; Prior 0.8%
• June ADP Employment Change 150K (Briefing.com consensus 163K); Prior was revised to 157K from 152K
• Weekly Initial Claims 238K (Briefing.com consensus 235K); Prior was revised to 234K from 233K; Weekly Continuing Claims 1.858 mln; Prior was revised to 1.832 mln from 1.839 mln
  • The key takeaway from the report is that initial jobless claims have kicked up a notch but continue to track comfortably below recession levels; however, it is apparent in continuing jobless claims that finding a new job after being laid off isn't as easy as it used to be, which is consistent with some slowing in the labor market.
• May Trade Balance -$75.1 bln (Briefing.com consensus -$76.0 bln); Prior was revised to -$74.5 bln from -$74.6 bln
  • The key takeaway from the report is that there were declines in both exports and imports, signaling that trade demand overall was softer in May.
• June S&P Global US Services PMI - Final 55.3; Prior 55.3
• May Factory Orders -0.5% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.7%
  • The key takeaway from the report is that business spending dropped off in May, which is consistent with a slowdown in manufacturing activity that was seen in the advance report for durable goods.
• June ISM Non-Manufacturing Index 48.8% (Briefing.com consensus 52.5%); Prior 53.8%
  • The key takeaway from the report is that it signals a contraction in activity in the nation's largest sector, which should reinforce the market's expectation that the Fed will start cutting rates before the end of the year.