Closing Stock Market Summary
Stocks experienced mixed action on the first session of the new month. The S&P 500 (-0.1%) and Dow Jones Industrial Average (-0.5%) settled lower while the Nasdaq Composite logged a 0.3% gain.
A solid gain in NVIDIA (NVDA 1150.00, +53.67, +4.9%), which introduced new products, limited downside moves in the major indices, but concerns about economic growth kept the broader market in check.
The aforementioned concerns were stirred by this morning's release of the ISM Manufacturing Index for May, which reflected a faster pace of contraction than the market expected (actual 48.7%; expected 49.6%). A reading below 50% indicates a contraction in activity.
Yields moved lower in response. The 10-yr note yield fell 11 basis points to 4.40% and the 2-yr note yield fell seven basis points to 4.82%. Dropping market rates had been a source of support for equities recently, but worries about an economic slowdown that could affect earnings prospects drove stock market action today.
On a related note, the Atlanta Fed GDPNow model estimate for Q2 real GDP growth is now 1.8%, down from 2.7% on May 31, in response to the soft data.
WTI crude oil futures ($74.29/bbl, -2.79, -3.6%) settled sharply lower in another manifestation of slowdown concerns, which could translate to weaker demand for oil.
This price action contributed to the selling in the S&P 500 energy sector. It was the worst performing sector by a decent margin, dropping 2.6%. The utilities (-1.2%) and industrial (-1.3%) sectors were the next worst performers.
Meanwhile, the information technology sector (+1.0%) led the pack by a decent margin, followed by the health care sector (+0.7%).
Separately, there was some speculative buying activity in the meme stock space after "Roaring Kitty" posted a screenshot showing a big position in GameStop (GME 28.00, +4.86, +21.0%).
- Nasdaq Composite: +11.8% YTD
- S&P 500:+10.5% YTD
- S&P Midcap 400: +6.4% YTD
- Dow Jones Industrial Average: +2.1% YTD
- Russell 2000: +1.6% YTD
Reviewing today's economic data:
- May S&P Global US Manufacturing PMI - Final 51.3; Prior 50.0
- May ISM Manufacturing Index 48.7% (consensus 49.6%); Prior 49.2%
- The key takeaway from the report is that it showed a faster pace of contraction in manufacturing activity that will stir worries about the economy missing its mark with a soft landing.
- April Construction Spending -0.1% (consensus 0.2%); Prior -0.2%
- The key takeaway from the report is that nonresidential spending was down in both private and public construction markets, which will be a drag on Q2 GDP growth.
Tuesday's economic calendar features:
- 10:00 ET: April Factory Orders (consensus 0.6%; prior 1.6%) and April job openings (prior 8.488 mln)