Closing Stock Market Summary
The major indices extended further into record territory today. The S&P 500 was up 0.3% at its high, the Nasdaq Composite showed a 0.3% gain at its best, and the Dow Jones Industrial Average traded above 40,000 for the first time at its high, sporting a 0.4% gain
Participants were lacking conviction, though, even when the market was at intraday highs. Market breadth was mixed through the entire session, skewing more negative by the close. Decliners led advancers by an 11-to-10 margin at both the NYSE and the Nasdaq.
The major indices all closed with modest losses after early gains faded in the afternoon. The late pullback was driven in part by a sense that stocks are due for a cooldown after reaching fresh all-time highs.
A slight rise in market rates also contributed to the modest pullback in equities. The 10-yr note yield settled two basis points higher at 4.38% and the 2-yr note yield settled five basis points higher at 4.79%.
Ten of the 11 S&P 500 sectors registered declines, but like index-level moves, the losses were relatively modest. None of the sector fell more than 0.8%. The consumer discretionary sector was the worst performer, dropping 0.8%, followed by the materials sector, which closed 0.7% lower.
The S&P 500 consumer staples sector was alone in positive territory at the close, showing a 1.5% gain. A sizable gain in shares of Walmart (WMT 64.00, +4.17, +7.0%) following impressive earnings results and outlook.
Meanwhile, Fellow Dow component Cisco (CSCO 44.32, -1.34, -2.7%) received a negative response to its earnings news.
Today's economic data did not garner much of a response from stocks or bonds. Weekly jobless claims continue to run below slowdown-like levels and housing starts were weaker-than-expected April. April import-export prices, the May Philadelphia Fed Index, and April industrial production were also released this morning.
- S&P 500:+11.1% YTD
- Nasdaq Composite: +11.2% YTD
- S&P Midcap 400: +8.4% YTD
- Dow Jones Industrial Average: +5.6% YTD
- Russell 2000: +3.4% YTD
Reviewing today's economic data:
- Initial jobless claims for the week ending May 11 decreased by 10,000 to 222,000 (consensus 218,000). Continuing jobless claims for the week ending May 4 increased by 13,000 to 1.794 million.
- The key takeaway from the report is that the level of initial jobless claims remains supportive of an economy that is not steering toward a recession.
- Housing starts increased 5.7% month-over-month in April to a seasonally adjusted annual rate of 1.360 million units (consensus 1.440 million). Building permits declined 3.0% month-over-month to a seasonally adjusted annual rate of 1.440 million (consensus 1.488 million).
- The key takeaway from the report is that there wasn't any strength in single-unit starts (-0.4% month-over-month) or single-unit permits (-0.8%), which is a setback for an inventory-constrained existing home market dealing with the added constraint of high mortgage rates and high prices that have created affordability pressures.
- Import prices increased 0.9% month-over-month in April (+1.1% yr/yr). Excluding fuel, they were up 0.7% (+0.9% yr/yr). Export prices rose 0.5% month-over-month in April (-1.0% yr/yr). Excluding agricultural products, they were up 0.7% (+0.1% yr/yr).
- The key takeaway from the report is that import and nonfuel import prices have accelerated in each of the last two months, which is contributing to inflation sticking stubbornly above the Fed's 2% target.
- The Philadelphia Fed Index for May checked in at 4.5 (consensus 5.0) versus 15.5 in April. A number above 0.0 is indicative of expansion, so the May reading connotes a slowdown in the pace of expansion versus the prior month.
- The key takeaway from the report is that manufacturing activity in the Philadelphia Fed region is still positive, but weakened in May in a manner that fits with a slower growth narrative.
- Total industrial production was unchanged month-over-month in April (consensus 0.2%) following a downwardly revised 0.1% (from 0.4%) in March. The capacity utilization rate dipped to 78.4% (consensus 78.4%) from an upwardly revised 78.5% (from 78.4%) in March. Total industrial production was down 0.4% yr/yr while the capacity utilization rate was 1.2 percentage points below its long-run average.
- The key takeaway from the report was the weakness in manufacturing output, which goes hand-in-hand with a lower growth outlook.
Looking ahead, Friday's economic lineup is limited to the April Leading Indicators Index at 10:00 ET.