Stock Market Update

[BRIEFING.COM] The stock market started today's session on a lower note, but like many times before, the weakness was greeted as a buying opportunity. The recovery was paced by the mega-cap stocks and semiconductor stocks, which have been relative (and absolute) strength leaders from the April 7 lows.

The opening dip was tied to trade/tariff concerns, as reports highlighted how both the U.S. and China are retaining export control restrictions as potential leverage if either feels the other has violated the terms of the Geneva agreement. Additionally, as the reciprocal tariff pause expiration date of July 9 draws closer, President Trump suggested certain countries may soon be receiving "take it or leave it" letters in terms of deal parameters.

Another stock-specific overhang was the weakness in Dow component Boeing (BA 205.03, -8.97, -4.19%), which was associated with the tragic news of an Air India 787 Dreamliner crashing today shortly after takeoff from Ahmedabad. The market was able to compartmentalize that issue and turn its direction back to the excitement surrounding Oracle's (ORCL 200.73, +24.35, +13.81%) earnings report and growth outlook, which has triggered the information technology sector's (+0.9%) outperformance.

That leadership has been key in elevating the market cap-weighted indices despite some less impressive breadth readings that show advancers and decliners nearly even at the NYSE and decliners leading advancers by a 4-to-3 margin at the Nasdaq.

Today's session, which has also been governed by some relatively pleasing Producer Price Index data for May and jobless claims data pointing to some softness in the labor market, has favored large-cap stocks. The Russell 2000 is down 0.5%, and the S&P Midcap 400 Index is down 0.2%.

Overall, there hasn't been a lot of conviction on the buy side or the sell side, but there has been a great deal of trading activity at the Nasdaq, where volume has already exceeded 11.0 billion shares.

Six S&P 500 sectors are higher, with gains ranging from 0.1% to 0.9%, and five S&P 500 sectors are lower, with losses ranging from 0.1% to 0.6%.

Reviewing today's economic data:

• The Producer Price Index for final demand increased 0.1% month-over-month in May (Briefing.com consensus 0.2%) after decreasing a revised 0.2% (from -0.5%) in April. The Producer Price Index for final demand, less foods and energy, also increased 0.1% month-over-month (Briefing.com consensus 0.3%), while the April reading was revised up to -0.2% from -0.4%. On a year-over-year basis, the index for final demand was up 2.6%, versus an upwardly revised 2.5% in April (from 2.4%), while the index for final demand, less foods and energy, was up 3.0%, versus an upwardly revised 3.2% (from 3.1%) in April.
  • The key takeaway from the report is that the positive impact of a cooler-than-expected reading is largely being offset by upward revisions to readings from April. That said, the year-over-year Core PPI rate decelerated to 3.0% from 3.2%, which is a positive development.
• Initial jobless claims for the week ending June 7 hit 248,000 (Briefing.com consensus 250,000), unchanged from the prior week's upwardly revised level (from 247,000). Continuing jobless claims for the week ending May 31 increased by 54,000 to 1.956 million from last week's downwardly revised 1.902 million (from 1.904 million).
  • The key takeaway from the report is that continuing claims reached a level not seen since late 2021, which will invite some questions about the strength of the labor market since laid-off workers are having an increasingly difficult time finding new jobs quickly.