Stock Market Update

[BRIEFING.COM] It was a much better-looking market today than yesterday. Yesterday's market wasn't "bad" in terms of returns, but it wasn't so great in terms of participation. Today was a different story. The returns looked even better, and the participation was broad-based.

Advancers led decliners by a better than 4-to-1 margin at the NYSE and by a better than 2-to-1 margin at the Nasdaq.

An encouraging earnings report and outlook from Micron (MU 126.00, -1.25, -0.98%), which was up 107% from its April 7 low going into the report, provided the jumpstart, along with hopes of easier monetary policy that were stirred by a Wall Street Journal report indicating the president is thinking about naming the replacement for when Fed Chair Powell's term ends in May 2026 by September or October, if not sooner. The 2-yr note yield dropped six basis points to 3.72%, and the 10-yr note yield fell four basis points to 4.25%.

A strong durable goods orders report for May and a comforting initial jobless claims report for the week ending June 21 lent some added support with their positive growth takeaways, overshadowing the downward revision to the dated Q1 GDP report.

The communication services sector (+1.8%) was today's best-performing sector, but the cyclical energy (+1.5%), consumer discretionary (+1.2%), industrials (+1.1%), and materials (+1.1%) sectors outperformed in today's session, which was subsidized by continued advances in the mega-cap stocks.

Separately, the Philadelphia Semiconductor Index, paced by gains in Marvell (MRVL 79.97, +4.04, +5.32%) and Broadcom (AVGO 270.17, +5.52, +2.09%), rose 0.9%, bringing its quarterly gain to 29.8%. NVIDIA (NVDA 155.02, +0.71, +0.46%) also contributed to today's move.

While the mega-cap cohort did just fine today, it was the small-cap and mid-cap stocks that shined. The Russell 2000 finished up 1.7%, while the S&P Midcap 400 Index increased 1.3%.

The S&P 500, which needed a move above 6,147.43 to set a new all-time high, came within a whisker of doing so, hitting an intraday high of 6,146.52. It also flirted with a record closing high but fell just short in that regard, too.

• S&P 500: +4.4% YTD
• Nasdaq: +4.4% YTD
• DJIA: +2.0% YTD
• S&P 400: -0.8% YTD
• Russell 2000: -2.6% YTD

Reviewing today's data:

• Durable goods orders surged 16.4% month-over-month in May (Briefing.com consensus 6.6%) on a 230.8% increase in orders for nondefense aircraft and parts. Excluding transportation, durable goods orders were up 0.5% month-over-month (Briefing.com consensus 0.1%).
  • The key takeaway, however, is that new orders for nondefense capital goods, excluding aircraft -- a proxy for business spending -- increased 1.7% on the heels of a 1.4% decline in April, reflecting a strong rebound after the reciprocal tariff pause announcement.
• Initial jobless claims for the week ending June 21 decreased by 10,000 to 236,000 (Briefing.com consensus 247,000), while continuing jobless claims for the week ending June 14 increased by 37,000 to 1.974 million, which is the highest level since November 6, 2021.
  • The key takeaway from the report is that initial jobless claims -- a leading indicator -- remain entrenched at fairly low levels that are not associated with a recession or even a significant slowdown for that matter, but to be fair, continuing jobless claims are elevated and do point to some softening in the labor market. Businesses may not be laying off a lot of employees, but it has gotten more challenging to find a new job after losing a job.
• The third estimate for Q1 GDP featured a downward revision to -0.5% (Briefing.com consensus -0.2%) from the second estimate of -0.2% that was driven by downward revisions to consumer spending and exports that were partly offset by a downward revision to imports. The GDP Price Deflator increased to 3.8% (Briefing.com consensus 3.7%) from the second estimate of 3.7%.
  • The key takeaway is that this report is very much "dated," given that we are just a few days away from the end of the second quarter, so it shouldn't have much cachet as a mover for a market that has been cheered since early April by the arrival of hard economic data that has quieted recession concerns. 
• The Advance International Trade in Goods deficit widened to $96.6 billion in May from -$87.0 billion in April, with exports dropping more than imports. Adv. Retail Inventories increased 0.3% after being unchanged in April, and Adv. Wholesale Inventories fell 0.3% after a 0.1% increase in April.
• May Pending Home Sales +1.8% (Briefing.com consensus 0.4%; prior -6.3%).