Stock Market Update

[BRIEFING.COM] The stock market climbed on Tuesday, buoyed by ongoing hope for a positive outcome of trade talks between officials from the U.S. and China. The S&P 500 (+0.6%) finished just behind the Nasdaq (+0.6%) while the Dow (+0.3%) continued this month's underperformance.

The trading day was largely uneventful, though it is worth noting that the market resisted selling efforts that knocked the major averages from highs on two occasions, only to be followed by a push to fresh highs for the day. President Trump's acknowledgement that Iran is becoming "much more aggressive" in nuclear talks with the U.S. was met with a brief mid-morning dip that was reversed quickly. Later in the day, Commerce Secretary Lutnick said that talks with China are going very well and could continue into tomorrow.

Ten sectors finished the day with gains, led by energy (+1.8%) even though crude oil could not sustain its morning gain, ending the pit session lower by 0.5% at $64.96/bbl. Energy was followed by the consumer discretionary sector (+1.2%), which received strong support from an extension of yesterday's bounce in Tesla (TSLA 326.09, +17.51, +5.7%).

Top-weighted technology (+0.5%) kept pace with the broader market, masking strength among chipmakers that helped the PHLX Semiconductor Index (+2.1%) extend this month's gain to 10.2% with Intel (INTC 22.11, +1.63, +8.0%) showing relative strength amid growing optimism surrounding its new fabrication technology.

The industrials sector (-0.4%) was the weakest performer throughout the day due to profit taking among defense stocks after their recent strength. Transport stocks, however, had a strong showing, sending the Dow Jones Transportation Average (+1.3%) back to its May high after Norfolk Southern (NSC 252.92, +2.35, +0.9%) said that its carload growth is up 5% quarter-to-date.

Treasuries finished the day with slim gains in longer tenors and modest losses up front ahead of tomorrow's release of May CPI (Briefing.com consensus 0.2%). The U.S. Treasury sold $58 bln in 3-yr notes to soft demand while tomorrow's session will feature a $39 bln 10-yr note reopening.

Today's economic data was limited to the NFIB Small Business Optimism Index for May, which rose to 98.8 from 95.8 in April.

Tomorrow, the market will receive the weekly MBA Mortgage Index (prior -3.9%) at 7:00 ET, followed by May CPI (Briefing.com consensus 0.2%; prior 0.2%) and Core CPI (Briefing.com consensus 0.3%; prior 0.2%) at 8:30 ET, and May Treasury Budget (prior $258.4 bln) at 14:00 ET.

• S&P 500 +2.7% YTD
• Nasdaq Composite +2.1% YTD
• Dow Jones Industrial Average +0.8% YTD
• S&P Midcap 400 -1.8% YTD
• Russell 2000 -3.4% YTD