Closing Stock Market SummaryThe S&P 500 decreased 0.2% on Wednesday and was unsuccessful yet again at setting new all-time highs. The Nasdaq Composite (-0.1%) and Dow Jones Industrial Average (-0.4%) also closed slightly lower while the Russell 2000 (-0.7%) underperformed with a 0.7% decline.
Overall price action was tight ranged for most of the session, fueling suspicions that the market was either teasing investors with record highs or market participants tacitly agreed to wait and see for tomorrow's CPI report for May.
The S&P 500 came within one point of its all-time intraday high (4238.04) in the opening minutes of action and slipped into the close after another rejection at its all-time closing high (4232.60).
Losses were concentrated in the cyclical financials (-1.1%), industrials (-1.0%), materials (-0.8%), and energy (-0.6%) sectors on no specific macro drivers, outweighing the gains in the health care (+1.0%), utilities (+0.9%), real estate (+0.2%), and information technology (+0.1%) sectors.
Notably, the 10-yr yield declined four basis points to 1.49%, settling near the bottom of its three-month consolidation range and signaling peak inflation expectations. The 2-yr yield remained unchanged at 0.14%. This curve-flattening activity acted as a headwind for the financials sector.
UPS (UPS 201.06, -8.70, -4.2%) struggled with a 4% decline, weighing on the industrials sector, after underwhelming shareholders with financial targets for 2023.
In the health care space, Merck (MRK 74.01, +1.64, +2.3%) signed a supply agreement with the U.S. government for a COVID-19 experimental pill. In addition, reports indicated that the government plans to purchase vaccine doses from Pfizer (PFE 39.81, +0.96, +2.5%) and Moderna (MRNA 217.44, +4.44, +2.1%) to donate to the world.
The U.S. Dollar Index increased 0.1% to 90.16. WTI crude futures settled lower by 0.3% (-$0.18) to $69.90/bbl.
Reviewing Wednesday's economic data:
- Wholesale inventories increased 0.8% m/m in April (consensus 0.8%) following a downwardly revised 1.2% increase (from +1.3%) in March.
- The weekly MBA Mortgage Applications Index decreased 3.1% following a 4.0% decline in the prior week.
Looking ahead, investors will receive the Consumer Price Index for May, the weekly Initial and Continuing Claims report, and the Treasury Budget for May on Thursday.
- Russell 2000 +17.8% YTD
- Dow Jones Industrial Average +12.6% YTD
- S&P 500 +12.3% YTD
- Nasdaq Composite +7.9% YTD