Closing Stock Market SummaryThe major indices traded in better form for most of the session today; however, things deteriorated in the afternoon trade when some mega cap stocks rolled over into negative territory. That roll, in turn, weighed heavily on index performance. Still, there was more positive action under the surface despite the major indices closing near their worst levels of the day.
Advancers led decliners by a 5-to-2 margin at the NYSE and a nearly 2-to-1 margin at the Nasdaq. The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.3% while the Vanguard Mega Cap Growth ETF (MGK) fell 0.5%. Microsoft (MSFT 337.22, -4.05, -1.2%) and Apple (AAPL 190.68, -1.13, -0.6%) were among the more influential laggards, contributing to the underperformance of the Dow Jones Industrial Average (-0.6%) and the information technology sector (-0.4%).
Small caps and value stocks, meanwhile, exhibited relative strength throughout the session, reflecting the pro-growth mentality driving today's tape. The Russell 2000 rose 1.2% while the Russell Value Indices all outperformed their growth counterparts.
The Employment Situation Report for June served as the primary catalyst for today's action.
Nonfarm payrolls increased by 209,000 (Briefing.com consensus 220,000) while nonfarm private payrolls rose by just 149,000 (Briefing.com consensus 210,000). The ADP Report on Thursday estimated that 497,000 jobs were added to private sector payrolls in June, so today's official employment report mitigated the strength of that reading.
An increase in the average workweek and a 0.4% increase in average hourly earnings bodes well for continued spending growth that will support continued growth in the economy. Overall, the employment report supported the soft landing narrative.
The economically-sensitive S&P 500 energy (+2.1%), materials (+0.9%), and industrials (+0.2%) sectors were the top performers while the defensive-oriented consumer staples (-1.3%), health care (-1.2%), and utilities (-0.7%) sectors closed at the bottom of the pack.
Treasuries saw some knee-jerk volatility immediately following this morning's data, but the market settled down as the session progressed. The 2-yr note yield fell seven basis points to 4.94% and the 10-yr note yield rose one basis point to 4.05%.
- Nasdaq Composite: +30.5% YTD
- S&P 500: +14.6% YTD
- S&P Midcap 400: +7.1% YTD
- Russell 2000: +5.9% YTD
- Dow Jones Industrial Average: +1.8% YTD
Reviewing today's economic data:
- Nonfarm payrolls increased by 209,000 in June (consensus 220,000) and there were downward revisions to April and May that, combined, showed 110,000 fewer jobs than originally thought. Average hourly earnings, though, increased a stronger than expected 0.4% (consensus 0.3%) and May was revised up to 0.4% (from 0.3%), so the year-over-year change in June was unchanged at 4.4%.
- The key takeaway from the report is that it continued to fit in the soft landing zone, as payroll growth slowed but remained positive; meanwhile, an increase in the average workweek and the 0.4% increase in average hourly earnings are a boon for aggregate earnings that will continue to support both discretionary and non-discretionary spending.
Looking ahead to Monday, market participants will receive the following economic data:
- 10:00 a.m. ET: May Wholesale Inventories (consensus -0.1%; prior -0.1%)
- 3:00 p.m. ET: May Consumer Credit (consensus $21.0 billion; prior $23.0 billion)