Closing Stock Market SummaryThe major indices all registered losses ranging from 0.2% to 1.3%. Several catalysts drove market participants to take some money off the table today amid a lingering sense that the market is due for a pullback following its big run in the first half of the year.
Those catalysts included geopolitical angst and concerns about global growth following the news that Services PMI readings for June out of China and the eurozone were weaker than expected, that the U.S. is looking to restrict China's access to cloud computing, and that China said foreign entities will have to request permission to export gallium and germanium.
There was also some knee-jerk selling in the wake of the release of the FOMC Minutes for the June 13-14 meeting at 2:00 p.m. ET. The minutes didn't contain anything surprising, though, and the major indices quickly bounced back from the spate of selling interest. Ultimately, the stock and bond markets finished their sessions in close proximity to where they were trading when the minutes were released.
Expectations for future rate hikes were also little changed. The CME FedWatch Tool shows an 88.7% probability of a 25-basis points rate hike at the July FOMC meeting (versus 86.8% on July 3) and a 17.7% probability of a second rate hike at the September FOMC meeting (versus 20.8% on July 3).
Relative strength from the mega cap space helped to limit index losses while the Russell 2000 lagged, declining 1.3%. The Vanguard Mega Cap Growth ETF (MGK) rose 0.1% while the Invesco S&P 500 Equal Weight ETF (RSP) fell 0.4%.
Most of the S&P 500 sectors registered a loss, but the materials sector (-2.5%) saw the biggest loss by a wide margin. The industrials (-0.6%) and information technology (-0.6%) sectors were also notable underperformers.
The communication services (+1.2%) and utilities (+1.1%) sectors, meanwhile, rose to the top of the leaderboard.
Decliners led advancers by a better than 2-to-1 margin at the NYSE and a nearly 2-to-1 margin at the Nasdaq.
Treasuries settled with losses across the curve. The 2-yr note yield rose two basis points to 4.94% and the 10-yr note yield rose nine basis points to 3.95%.
- Nasdaq Composite: +31.8% YTD
- S&P 500: +15.8% YTD
- S&P Midcap 400: +7.3% YTD
- Russell 2000: +6.3% YTD
- Dow Jones Industrial Average: +3.4% YTD
Reviewing today's economic data:
- Factory orders increased 0.3% month-over-month in May (consensus 0.6%) following a downwardly revised 0.3% increase (from 0.4%) in April. Excluding transportation, factory orders declined 0.5% month-over-month on the heels of a 0.6% decline in April. Shipments of manufactured goods also increased 0.3% month-over-month after declining 0.6% in April.
- The key takeaway from the report is that new order activity for manufactured goods remained weak, excluding transportation.
Looking ahead to Thursday, market participants will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior 3.0%)
- 8:15 ET: June ADP Employment Change (consensus 245,000; prior 278,000)
- 8:30 ET: Weekly Initial Claims (consensus 250,000; prior 239,000), Continuing Claims (prior 1.742 mln), May Trade Balance ( consensus -$69.0 bln; prior -$74.6 bln)
- 9:45 ET: June IHS Markit Services PMI - Final (prior 54.9)
- 10:00 ET: June ISM Non-Manufacturing Index ( consensus 51.1%; prior 50.3%) and May job openings (prior 10.103 mln)
- 10:30 ET: Weekly natural gas inventories (prior +76 bcf)
- 11:00 ET: Weekly crude oil inventories (prior -9.60 mln)