Stock Market Update

[BRIEFING.COM] The stock market traded with a positive bias throughout today's session, driven by the following catalysts:

• President Trump's announcement of a ceasefire between Israel and Iran.
• A continued drop in oil prices. WTI crude futures, which topped $78.00/bbl yesterday, fell another 6.1% today to $64.46/bbl.
• A drop in Treasury yields following a consumer confidence report for June that was weaker than expected and showed a drop in average 12-month inflation expectations.
  • The 2-yr note yield settled down two basis points at 3.81%, and the 10-yr note yield settled down two basis points at 4.30%.
• An encouraging full-year outlook from cruise line operator Carnival (CCL 25.70, +1.66, +6.88%).
• A drive by Senate leadership to get the reconciliation bill passed and on the president's desk to sign by July 4.

Separately, Fed Chair Powell appeared before the House Financial Services Committee to deliver his semiannual monetary policy report. He expressed his belief that tariff increases will likely push up prices this year and impact economic activity but also showed an open mind on future policy action. The Fed Chair conceded that many paths are possible, one of which is that inflation could be cooler than expected, which would suggest the Fed could cut sooner.

Mr. Powell has inferred as much in the past, but his even-keeled demeanor and open-mindedness today provided some added comfort food for a market already feeling a good bit of relief that the Israel-Iran conflict has de-escalated.

There was broad-based buying interest that took the S&P 500 as high as 6,101.76 shortly before today's close. The mega-cap stocks and semiconductor stocks steered that move, but the prevalent bullish bias also manifested itself in the outperformance of high-beta stocks and small-cap stocks, which are one in the same in some instances.

The information technology sector (+1.6%), underpinned by some hefty gains in its semiconductor components, including NVIDIA (NVDA 147.82, +3.65, +2.53%), paced today's advance, along with the financials (+1.5%), communication services (+1.4%), and health care (+1.2%) sectors. The Philadelphia Semiconductor Index surged 3.8%, leaving it up 27.4% for the quarter.

The energy sector (-1.5%), which fell in sympathy with oil prices, and the defensive-oriented consumer staples sector (-0.03%) were the only sectors to lose ground.

Advancers led decliners by a nearly 3-to-1 margin at the NYSE and by a better than 3-to-1 margin at Nasdaq. Trading volume was above average at the NYSE but below average at the Nasdaq.

• S&P 500: +3.6% YTD
• Nasdaq: +3.1% YTD
• DJIA: +1.3% YTD
• S&P 400: -1.3% YTD
• Russell 2000: -3.1% YTD

Reviewing today's data:

• The Q1 Current Account Deficit widened to $450.2 billion from a downwardly revised $312.0 billion (from -$303.9 billion) in the fourth quarter.
• April FHFA Housing Price Index (Actual -0.4%; Briefing.com consensus 0.0%; prior revised to 0.0% from -0.1%).
• April S&P Case-Shiller Home Price Index (Actual 3.4%; Briefing.com consensus 4.1%; prior 4.1%)
• The Conference Board's Consumer Confidence Index slumped to 93.0 in June (Briefing.com consensus 99.0) from an upwardly revised 98.4 (from 98.0) in May. In the same period a year ago, the index stood at 97.8.
  • The key takeaway from the report is that consumers were less positive about business conditions and job availability, which is a perception that could lead to reduced discretionary spending activity.