Closing Stock Market SummaryThe S&P 500 increased 0.3% on Tuesday in a volatile session in which the large growth stocks did the heavy lifting. The Nasdaq Composite pulled ahead with a 1.0% gain, representing the mega-cap outperformance, while the Dow Jones Industrial Average (-0.3%) and Russell 2000 (-0.02%) closed slightly lower.
The session started on a strong note for the market: the S&P 500 rallied as much as 1.9% amid gains across all 11 sectors, ostensibly because the 10-yr yield dropped below 3.00% (-9 bps to 2.99%). The price action in the 10-yr yield, though, was rooted in underlying growth concerns amid news that Shanghai was again tightening COVID-19 restrictions.
By early afternoon, the S&P 500 was down as much as 0.8% as investors sold into the early strength on no specific news catalyst. Selling was relatively indiscriminate apart from the steady gains in the beaten-down mega-caps, which ended up leading the market off session lows and the S&P 500 back above the 4,000 level by the close.
The Vanguard Mega Cap Growth ETF (MGK 193.89, +1.97) advanced 1.0%, whereas the Invesco S&P 500 Equal Weight ETF (RSP 142.51, -0.37) declined 0.3%.
The mega-caps propped up the S&P 500 information technology (+1.6%) and communication services (+0.8%) sectors to the top of the standings, joined by the energy sector (+0.9%). Conversely, the real estate (-2.3%), utilities (-1.2%), and financials (-0.8%) sectors were the worst performers.
The more speculative growth stocks, meanwhile, continued to disappoint, specifically Peloton (PTON 12.90, -1.23, -8.7%), Upstart (UPST 33.61, -43.52, -56.4%), GoodRx (GDRX 7.97, -2.78, -25.9%), and Sofi Technologies (SOFI 5.25, -0.72, -12.1%) following their earnings and/or guidance. Note, SOFI's earnings were released ahead of schedule prior to the close.
Bank stocks, in particular, were pressured by some flattening action in the Treasury market, where the 2s10s spread narrowed by 11 basis points. The 2-yr yield increased two basis points to 2.63%. The SPDR S&P Bank ETF (KBE 46.34, -0.62) fell 1.3%.
In M&A news, Biohaven Pharma (BHVN 140.00, +56.86, +68.4%) agreed to be acquired by Pfizer (PFE 49.49, +0.85, +1.8%) for $11.6 billion, or $148.50/share, in cash -- a hefty 79% premium over yesterday's closing price. Duke Realty (DRE 49.58, +1.87, +3.9%) received a takeover proposal from Prologis (PLD 125.47, -6.90, -5.2%) for about $24 billion, or $61.68/share, in stock.
WTI crude futures settled just above $100.00 per barrel ($100.02, -3.41, -3.3%). The U.S. Dollar Index increased 0.2% to 103.90.
Tuesday's economic data was limited to NFIB Small Business Optimism, which was unchanged at 93.2 in April. Looking ahead, investors will receive the Consumer Price Index for April, the Treasury Budget for April, and the weekly MBA Mortgage Applications Index on Wednesday.
- Dow Jones Industrial Average -11.5% YTD
- S&P 500 -16.1% YTD
- Russell 2000 -21.5% YTD
- Nasdaq Composite -25.0% YTD