Stock Market Update

[BRIEFING.COM] The stock market has continued its winning ways so far today. The major indices traded near, or below, their prior closing levels earlier in the session, though. 

The initial muted moves followed a consumer sentiment report for May that was low on sentiment and high on inflation expectations. The latter featured an increase in year-ahead inflation expectations from 6.5% to 7.3%.

Buying interest picked up as the session has progressed, driven by momentum and a fear of missing out on further gains. Buying in the equity market is also fueled b by a drop in market rates. Rates moved up slightly in response to the increase in inflation expectations, but are still lower than yesterday's settlement. 

The 2-yr note yield, which stood at 3.93% ahead of the 10:00 a.m. ET release, has moved back up to 3.97%, while the 10-yr note yield, at 4.40% ahead of the release, has climbed to 4.43%, which is three basis points lower than yesterday.

Broad buying has nine of the 11 S&P 500 sectors are higher led by health care (+1.3%), utilities (+0.9%), and real estate (+0.8%). The technology sector (-0.3%) is an influential laggard due to losses in Apple (AAPL 210.98, -0.48, -0.2%) and Microsoft (MSFT 450.37, -2.76, -0.6%). 

Reviewing today's economic data:

• April Housing Starts 1.361 mln (Briefing.com consensus 1.383 mln); Prior was revised to 1.339 mln from 1.324 mln, April Building Permits 1.412 mln (Briefing.com consensus 1.450 mln); Prior was revised to 1.481 mln from 1.467 mln
  • The key takeaway from the report is the weakness in single-unit permits across all regions, as it speaks to cautious-minded consumers and builders dealing with higher prices, higher mortgage rates, and higher building costs.
• April Import Prices 0.1%; Prior was revised to -0.4% from -0.1%
• April Import Prices ex-oil 0.4%; Prior was revised to -0.1% from 0.1%
• April Export Prices 0.1%; Prior was revised to 0.1% from 0.0%
• April Export Prices ex-ag. 0.1%; Prior was revised to 0.1% from -0.1%
• May Univ. of Michigan Consumer Sentiment - Prelim 50.8 (Briefing.com consensus 55.0); Prior 52.2
  • The key takeaway from the report is that it continues to reflect some deteriorating views among consumers about their personal finances and some alarming views about their inflation expectations. Note, this survey was conducted between April 22 and May 13, closing two days after the U.S.-China tariff de-escalation news, so it doesn't capture the full consideration of that pleasing news.