Stock Market Update

[BRIEFING.COM] The stock market began the week on a slightly higher note with modest gains in the S&P 500 (+0.1%) and Nasdaq (+0.3%) while small caps outperformed throughout the day, sending the Russell 2000 higher by 0.7%.

The Monday session started with some guarded optimism surrounding trade talks between officials from U.S. and China. The market was eager to hear some news from the discussions in London, especially after NEC Director Hassett said that he does not expect a long meeting, but he expects a handshake agreement pertaining to rare earth elements. However, the day went by with no meaningful updates, other than a Fox Business report that talks will continue tomorrow after today's meeting lasted nearly seven hours. President Trump chimed in shortly before the close, saying he expects an update later this evening, which invited some profit taking that sent the major averages back toward their opening levels.

China was also in the spotlight overnight, when it reported more deflationary CPI and PPI readings for May, which are sending a poor signal about the country's pace of growth. Separately, China's Trade Balance report for May showed that exports to the U.S. dropped by more than 1/3.

Five sectors finished the day in positive territory after overcoming some early softness. The consumer discretionary sector (+1.1%) ended in the lead, seizing the top spot from the technology sector (+0.3%), which started in the lead, but finished just ahead of the broader market.

The discretionary sector received notable help from its two largest components, as Tesla (TSLA 308.55, +13.44, +4.6%) bounced back above its 50-day moving average (292.61) after last week's poor showing while Amazon (AMZN 216.98, +3.41, +1.6%) reached its best level since late February.

Technology was boosted by chipmakers with the PHLX Semiconductor Index (+2.0%) defending the bulk of its gain into the close even though chip giant NVIDIA (NVDA 142.63, +0.91, +0.6%) gave back a large chunk of its early advance that followed CEO Huang's opening keynote speech at London Tech Week. Qualcomm (QCOM 155.41, +6.17, +4.1%) was a notable outperformed among chip stocks, as it rallied to levels not seen since late March after announcing a $2.4 bln acquisition of Alphawave.

Elsewhere in technology, Apple (AAPL 201.45, -2.47, -1.2%) contributed to the intraday slip from highs after the company presented at its Worldwide Developers Conference, but only unveiled cosmetic software updates.

Economic data released today was limited to the Wholesale Inventories report for April (0.2%; Briefing.com consensus 0.0%; prior 0.4%), but things should get more exciting on that front in a couple days when the market receives the CPI report for May (Briefing.com consensus 0.2%; prior 0.2%).

Treasuries finished with gains across the curve that were paced by the short end. The 2-yr yield fell four basis points to 4.00% while the 30-yr yield dipped one basis point to 4.95% with help from an intraday release of the May Survey of Consumer Expectations from the New York Fed, which showed a drop in year-ahead inflation expectations to 3.2% from 3.6%. The three-year outlook decreased to 3.0% from 3.2% while the five-year outlook dipped to 2.6% from 2.7%.

Tomorrow's data will be limited to the 6:00 ET release of the NFIB Small Business Optimism Index for May (prior 95.8).

• S&P 500 +2.1% YTD
• Nasdaq Composite +1.5% YTD
• Dow Jones Industrial Average +0.5% YTD
• S&P Midcap 400 -2.0% YTD
• Russell 2000 -3.8% YTD