Stock Market Update

[BRIEFING.COM] The stock market has faced some early pressure to begin June, but the S&P 500 (-0.1%) and Nasdaq (+0.2%) have been resilient, while the Dow (-0.5%) is having a bit more difficult time recovering from its soft start.

A new development on the tariff front contributed to the lower start after President Trump announced that the tariff on steel imports into the U.S. will be doubled to 50% on Wednesday, but it should be noted that today's lower open followed the stock market's best May showing in 15 years, so a desire for some profit taking should not be a huge surprise.

Tariffs are likely to remain in the conversation in the coming days after a senior White House official said that President Trump is likely to speak with China's President Xi this week.

Eight sectors remain in negative territory at midday, but only two are still down more than 0.5%. Industrials (-0.9%) and the consumer discretionary sector (-0.7%) are pressured by the prospect of higher input costs with automakers General Motors (GM 47.34, -2.27, -4.6%) and Ford (F 9.93, -0.45, -4.4%) both down about 4.5%.

On the upside, the energy sector (+1.1%) is the top performer with help from a rising price of oil after OPEC+ announced a better-than-feared 411,000 barrel per day production increase for July. WTI crude is up $2.35, or 3.9%, at $63.14/bbl with its 50-day moving average (63.00) right above.

Top-weighted technology (+0.5%) also trades comfortably in the green, though the outperformance is owed to gains in some of its largest components while smaller sector members trade lower. Broadcom (AVGO 247.78, +5.71, +2.4%) is a notable standout, rising toward its record high from December 2024 (251.88) ahead of Thursday's release of its quarterly results.

Treasuries started the day in the red, but unlike stocks, they have not been able to resist the early weakness even though today's data underwhelmed. The 10-yr note hovers just above its low with its yield up five basis points at 4.46% while the 2-yr yield is up three basis points at 3.94%.

Reviewing today's economic data:

• The May ISM Manufacturing Index slipped to 48.5% in May (Briefing.com consensus 49.0%) from 48.7% in April. The dividing line between expansion and contraction is 50.0%, so the May reading suggests that activity in the manufacturing sector contracted at a slightly faster pace than the prior month.
  • The key takeaway from the report is that manufacturing sector activity was hampered in May by tariff uncertainty.
• The S&P Global U.S. Manufacturing PMI for May was revised down to 52.0 from 52.3 in the preliminary reading, but it was up from April's final reading of 50.2.
• Total construction spending decreased 0.4% month-over-month in April (Briefing.com consensus 0.1%) after a downwardly revised 0.8% decline (from -0.5%) in March. Total private construction was down 0.7% month-over-month, while total public construction was up 0.4% month-over-month. On a year-over-year basis, total construction spending was down 0.5%.
  • The key takeaway from the report is that residential spending weakened noticeably with a downturn in new single-family construction.