Closing Stock Market SummaryToday was hump day and the major indices did not get over the hump. They all fell backward, slipping on rising energy costs and renewed angst about the economic and earnings growth outlook.
A series of headlines ignited the growth concerns, which led to some fairly broad-based selling interest.
- Intel (INTC 41.23, -2.30, -5.3%) said the macro environment has been weaker and that circumstances at this point are much worse than it had anticipated coming into the quarter.
- Scotts Miracle-Gro (SMG 93.24, -8.94, -8.8%) slashed its FY22 (Sep) EPS outlook well below the current consensus estimate, noting its fixed cost structure has seen significantly greater pressure due to replenishment orders from its retail partners not being what it expected since mid-May.
- The OECD cut its 2022 global GDP view to 3.0% from 4.5%.
- The Atlanta Fed's GDPNow model estimate for Q2 was lowered to 0.9% from 1.3%.
- The Reserve Bank of India raised its key lending rate by a larger-than-expected 50 basis points to 4.90% (a 40 bps increase was expected), following suit with the Reserve Bank of Australia's larger-than-expected rate hike on Tuesday.
- The MBA Mortgage Applications Index was down 6.5% week-over-week, driven by a 7% decline in purchase applications and a 6% decline in refinancing applications.
One of the main distracting factors for investors, though, was the continued increase in energy costs. WTI crude futures settled the day up 2.0% at $121.96/bbl. At one point, natural gas futures were up as much as 4.0% to $9.66/mmbtu, yet they hit a wall of resistance late and tumbled into their close, settling the day down 7.2% at $8.67/mmbtu.
The pullback in natural gas prices didn't do anything to stir the conviction of buyers. They held to the sidelines for the most part, biding some time in front of the ECB policy decision on Thursday and the May Consumer Price Index on Friday. Accordingly, volume was on the lighter side today with only 848 million shares traded at the NYSE.
A move in the 10-yr note yield back above 3.00% further dissuaded them. The benchmark instrument settled the day up six basis points at 3.03% in response to inflation worries and a soft 10-yr note auction that saw the high yield of 3.03% tail the when-issued yield of 3.018%.
The growth concerns that prevailed today in the stock market were evident in the tape.
Large-cap stocks outperformed small-cap stocks; value stocks underperformed growth stocks; the Dow Jones Transportation Average dropped 3.8%; the Philadelphia Semiconductor Index slumped 2.4%; and some of today's worst-performing sectors were the economically-sensitive real estate (-2.4%), materials (-2.1%), industrials (-1.8%), and financial (-1.7%) sectors.
Every sector, though, with the exception of the energy sector (+0.2%), finished the day with a loss.
Declining issues outpaced advancing issues by a nearly 3-to-1 margin at the NYSE. Breadth wasn't as lopsided at the Nasdaq, although declining issues outpaced advancing issues by a comfortable margin.
Reviewing today's economic data:
- MBA Mortgage Applications declined 6.5% week-over-week versus a prior decline of 2.3%; purchase applications fell 7% and refinancing applications dropped 6%.
- April Wholesale Inventories increased 2.2% month-over-month (consensus 2.1%) following an upwardly revised 2.7% increase (from 2.3%) in March.
Looking ahead, market participants will receiver the Weekly Initial and Continuing Jobless Claims Report (8:30 a.m. ET) and the EIA's Natural Gas Inventories Report (10:00 a.m. ET) on Thursday. Prior to those reports, the ECB will issue an updated policy directive at 7:45 a.m. ET.
- Dow Jones Industrial Average: -9.5% YTD
- S&P 400: -11.3% YTD
- S&P 500: -13.6% YTD
- Russell 2000: -15.8% YTD
- Nasdaq Composite: -22.7% YTD