Closing Market Summary: Influential Sectors Lead Stocks Lower
The stock market ended the Tuesday session on a modestly lower note, which masked an early drop that had the S&P 500 (-0.3%) down as much as 20 points at the start.
Equity indices endured a shaky open after the overnight session featured more selling in European and U.S. bond markets; however, that pressure abated shortly before the opening bell with the U.S. 10-yr note marking its low at 8:00 ET. At that time, the benchmark yield marked a session high at 2.36% and began its daylong retreat that ended at 2.26% (-3 bps). The ensuing rally in Treasuries fostered a rebound in equities with the S&P 500 returning above its 50-day moving average (2,089) after sliding beneath that level at the start.
The S&P 500 ended the day not far below its flat line, but only two sectors finished the day with gains. The energy space (+0.4%) outperformed throughout the day thanks to a 2.5% gain in crude oil ($60.59/bbl), which was underpinned by a 0.5% decline in the Dollar Index (94.55, -0.46).
Elsewhere, the industrial sector (-0.1%) settled just below its flat line even though high-beta transport stocks lagged notably. The Dow Jones Transportation Average fell 1.2% with all 20 components registering losses while the largest sector member—General Electric (GE 27.03, +0.11)—gained 0.4%.
Meanwhile, the remaining cyclical sectors posted losses. The materials space (-1.0%) spent the day behind other groups while technology (-0.5%) and financials (-0.4%) prevented the broader market from turning positive. Similar to transport stocks, high-beta chipmakers displayed relative weakness throughout the day with the PHLX Semiconductor Index falling 0.9%.
As for large cap tech names, Microsoft (MSFT 47.35, -0.02) and Cisco Systems (CSCO 29.23, +0.02) outperformed while Google (GOOGL 538.73, -7.05) and Facebook (FB 77.46, -0.55) lagged. Also of note, Yelp (YELP 48.83, +0.21) settled lower by 0.4% after the Wall Street Journal contrasted the potential acquisition of the company with Verizon's (VZ 49.62, -0.18) purchase of AOL (AOL 50.52, +7.93) for $50/share or $4.40 billion. Recall that Yelp spiked 23.0% on Thursday after the Wall Street Journal reported the social media company is looking into a potential sale.
Similar to technology, the influential health care sector (-0.5%) presented a headwind throughout the day. The sector finished among the laggards even as the biotech group settled near the broader market with the iShares Nasdaq Biotechnology ETF (IBB 351.79, -0.50) reclaiming its 50-day moving average (349.96).
Today's participation was a bit light with fewer than 700 million shares changing hands at the NYSE floor.
Economic data was limited to the Treasury Budget and JOLTS:Tomorrow, the weekly MBA Mortgage Index will be released at 7:00 ET while April Retail Sales (consensus 0.2%) and April Import/Export Prices will be reported at 8:30 ET. The day's data will be topped off with the 10:00 ET release of the Business Inventories report for March (consensus 0.2%).
- The Treasury budget showed a surplus of $157.00 billion in April 2015, up from a surplus of $106.90 billion in April 2014 and roughly in-line with the consensus estimate that called for a surplus of $155.00 billion
- The Treasury data are not seasonally adjusted, so the April surplus cannot be compared to the $52.90 billion deficit recorded in March
- The Job Openings and Labor Turnover Survey for March showed that job openings decreased to 4.994 million from a revised rate of 5.144 million (from 5.133 million)
- Nasdaq Composite +5.1% YTD
- Russell 2000 +2.4% YTD
- S&P 500 +2.0% YTD
- Dow Jones Industrial Average +1.4% YTD