>>> Closing Market Summary: Consumer Staples Lead Market Lower for


Closing Market Summary: Consumer Staples Lead Market Lower for First Time This Week

Stocks dropped for the first time this week on Thursday, giving back around a third of their weekly gains, as investors tried to sort through the latest pile of corporate earnings. The S&P 500 declined 0.6%, closing a step above its 50-day moving average (2687), while the Dow and the Nasdaq lost 0.3% and 0.8%, respectively.

Nine of the eleven S&P 500 sectors finished Thursday in negative territory, with consumer staples (-3.1%) taking the biggest hit. Tobacco giant Philip Morris (PM 85.64, -15.80) paced the consumer staples retreat, plunging 15.6% to its lowest level since late 2015, after reporting a decline in cigarette shipment volume for the first quarter and slower-than-expected growth for its IQOS product -- which heats tobacco instead of burning it. Procter & Gamble (PG 74.95, -2.53) also weighed on the sector, losing 3.3%, despite reporting above-consensus Q1 profits.

The top-weighted technology sector (-1.1%) finished a ways up from consumer staples, but still in the lower half of the sector standings as chipmakers weighed, evidenced by a 4.3% decline in the Philadelphia Semiconductor Index. Apple supplier Taiwan Semi (TSM 39.53, -2.39) was a driver of the bearish bias, losing 5.7%, after its first quarter earnings and revenues came in below estimates; the chipmaker also lowered its guidance for Q2. News that China has concerns about Qualcomm's (QCOM 52.57, -2.66) acquisition of NXP Semi (NXPI 107.17, -5.82) also had a negative impact.

At the opposite end of the sector standings, the influential financial sector (+1.5%) had a strong outing, helped by a steepening of the yield curve and upbeat Q1 results from American Express (AXP 102.37, +7.22); AmEx beat both earnings and revenue estimates in addition to raising its guidance for FY18. As for the yield curve, the 2s10s spread, which hit a 10-year low earlier this week, increased four basis points to 49 bps. The benchmark 10-yr yield accounted for all of that gain, advancing four basis points to 2.91% -- its highest level in eight weeks.

The energy sector was also relatively strong, adding 0.1%, even though WTI crude futures gave back all of a 1.6% intraday advance (and then some), closing lower by 0.2% at $68.30 per barrel. A stronger dollar weighed on the commodity, which -- despite Thursday's downtick -- is still hovering near its highest level in more than three years. The U.S. Dollar Index advanced 0.3% to 89.61 -- its highest level in more than a week -- with the greenback's most notable move coming against the British pound; the GBP/USD dropped 0.8% to 1.4092.

A Bloomberg report, which claims that Deputy Attorney General Rod Rosenstein told President Donald Trump last week that he isn't a target of any part of Special Counsel Robert Mueller's investigation, helped equities pair some of their losses ahead of the closing bell. Volume was light once again though, with just 754 million shares changing hands at the New York Stock Exchange.

Reviewing Thursday's economic data, which included the weekly Initial Claims report, the Philadelphia Fed Index for April, and the Conference Board's Leading Economic Index for March:

  • The latest weekly initial jobless claims count totaled 232,000, while the Briefing.com consensus expected a reading of 226,000. Today's tally was below the unrevised prior week count of 233,000. As for continuing claims, they declined to 1.863 million from a revised count of 1.878 million (from 1.871 million).
    • The key takeaway from this report is that it covered the period in which the survey for the April employment report was conducted, so it will fuel expectations for a strong gain in nonfarm payrolls.
  • The Philadelphia Fed Survey for April rose to 23.2 (consensus 21.0) from an unrevised 22.3 in March.
    • The key takeaway from this report is that there was a notable uptick in the Prices Paid Index (from 42.6 to 56.4), as well as the Prices Received Index (from 20.7 to 29.8), which will pique interest about budding inflation pressure.
  • The Conference Board Leading Economic Index increased 0.3% in March (consensus +0.4%). The prior month's reading was revised to +0.7% from +0.6%.
    • The key takeaway from the report is that the 4.3% growth rate for the index for the six-month period ending March 2018 was much faster than the 1.9% growth rate over the previous six months.

Investors will not receive any economic data on Friday.

  • Nasdaq Composite: +4.9% YTD
  • Russell 2000: +2.5% YTD
  • S&P 500: +0.7% YTD
  • Dow Jones Industrial Average: -0.2% YTD