Closing Stock Market SummaryThe stock market closed out this quarterly options expiration day on a downbeat note, but losses were still relatively slim when considering the big move up recently. The major indices spent most of the session oscillating around their flat lines before finding some downside momentum in the afternoon trade. Ultimately, they settled near their lows of the day. The S&P 500 for its part was able to maintain a posture above 4,400 on a closing basis.
Treasuries also settled with losses despite the preliminary University of Michigan Consumer Sentiment Index for June revealing a sharp drop in year-ahead inflation expectations to 3.3% from 4.2% -- the lowest since March 2021. The 2-yr note yield rose seven basis points to 4.71%. The 10-yr note yield rose four basis points to 3.77%. The move up in yields acted as a headwind for mega caps and other growth stocks.
Mega caps had an outsized influence on index losses, but many other stocks also contributed. The Vanguard Mega Cap Growth ETF (MGK) fell 0.6% and the market-cap weighted S&P 500 fell 0.4%.
Decliners led advancers by a roughly 5-to-3 margin at both the NYSE and at the Nasdaq.
Pleasing earnings and guidance from Adobe (ADBE 495.18, +4.27, +0.9%), along with Morgan Stanley naming NVIDIA (NVDA 426.92, +0.39, +0.1%) its top pick in AI and raising its price target to $500 from $450, continued to drive an AI buzz. That buzz, however, was not enough to offset underlying weakness in the market, which still managed to record its fifth straight winning week.
Only three of the 11 S&P 500 sectors logged gains. Utilities (+0.5%), materials (+0.1%), and consumer staples (+0.1%) led the pack. Meanwhile, lagging mega cap components drove the communication services (-1.0%) and information technology (-0.8%) sectors to the bottom of the pack.
Small cap stocks lagged their larger peers today after outperforming so far this month. The Russell 2000 fell 0.7% today, but it's still up 7.2% for the month.
Trading volume today was extremely heavy due to the options expiration and the S&P quarterly rebalancing.
As a reminder, bond and equity markets are closed on Monday in observance of Juneteenth.
- Nasdaq Composite: +30.8% YTD
- S&P 500: +14.9% YTD
- Russell 2000: +6.5% YTD
- S&P Midcap 400: +6.2% YTD
- Dow Jones Industrial Average: +3.5% YTD
Today's economic data was limited to the preliminary University of Michigan Consumer Sentiment Index for June, which checked in at 63.9 (consensus 60.2) versus the final reading of 59.2 for May. In the same period a year ago, the index stood at 50.0.
- The key takeaway from the report is that an easing in year-ahead inflation expectations underpinned a pickup in consumer sentiment; however, the report notes that a majority of consumers still expect difficult times for the economy over the next year.
Looking ahead to Tuesday, economic data is limited to May Housing Starts (prior 1.401 million) and Building Permits (prior 1.416 million) at 8:30 a.m. ET.