Closing Stock Market SummaryThe stock market closed on a softer note today after Friday's broad-based rally. Things were more mixed in the early going, though, with relative strength from mega cap stocks supporting the broader market. The major indices ultimately settled near their worst levels of the day. Still, there wasn't any concerted selling interest and index losses were relatively modest.
The market started to fade around 1:00 p.m. ET after Apple (AAPL 179.58, -1.37, -0.8%), which reached a record high and was up as much as 2.2% today, also started to fade along with other mega cap stocks. The Vanguard Mega Cap Growth ETF (MGK), up as much as 0.8%, fell 0.1% today while the Invesco S&P 500 Equal Weight ETF (RSP) declined 0.3%.
Also, the S&P 500 being unable to breach 4,300 today contributed to the afternoon pullback.
Growth concerns were part of the market narrative. Those concerns were piqued by the May ISM Non-Manufacturing Index, which fell to 50.3% from 51.9% in April. The dividing line between expansion and contraction is 50.0%.
Notably, weakness in bank stocks was another factor holding the broader market in check today. This occurred after The Wall Street Journal reported that large banks could face a 20% increase in capital requirements. The SPDR S&P Regional Banking ETF (KRE) fell 2.6% and the SPDR S&P Bank ETF (KRE) fell 2.2%. The S&P 500 financials sector was among the worst performers, down 0.6%.
The industrials (-0.7%) and energy (-0.6%) sectors were also among the worst performers today. The latter declined despite rising oil prices ($71.98/bbl, +0.33, +0.5%) in response to Saudi Arabia saying it will implement an additional voluntary cut in its production of crude oil, amounting to one million barrels per day starting in July.
The communication services (+0.6%), utilities (+0.5%), and health care (+0.4%) sectors led the outperformers.
The health care sector was supported by outperforming biotech, which maintained some strength as the broader market declined. This came as the American Society of Clinical Oncology ASCO Annual Meeting 2023 continued in Chicago.
The SPDR S&P Biotech ETF (XBI) rose 0.3% and the iShares Biotechnology ETF (IBB) rose 0.4%. Amgen (AMGN 221.88, +3.81, +1.8%), Regeneron (REGN 750.27, +10.32, +1.4%), and Biogen (BIIB 302.13, +1.93, +0.6%) were among the top performers from that space.
Treasuries settled the session flattish. The 2-yr note yield fell three basis points to 4.48% and the 10-yr note yield was unchanged at 3.69%.
- Nasdaq Composite: +26.4% YTD
- S&P 500: +11.3% YTD
- Russell 2000: +2.6% YTD
- Dow Jones Industrial Average: +1.3% YTD
- S&P Midcap 400: +2.0% YTD
Reviewing today's economic data:
- The IHS Markit Services PMI rose to 54.9 in the final reading for May from 53.6.
- The ISM Non-Manufacturing Index for May decreased to 50.3% ( consensus 52.3%) from 51.9% in April. The dividing line between expansion and contraction is 50.0%, so the May reading reflects continued growth in the services sector, but at a slower pace than the prior month.
- The key takeaway from the report is that the majority of respondents indicate business conditions are currently stable, yet concerns relative to the slowing economy have been noted, evidenced in part by the downturn in the employment index into contraction territory after three months of growth.
- Factory orders increased 0.4% month-over-month in April (consensus 0.8%) following a downwardly revised 0.6% increase (from 0.9%) in March. Shipments of manufactured goods decreased 0.4% month-over-month after declining 0.6% in March.
- The key takeaway from the report is that business spending picked up nicely from March.
There is no U.S. economic data of note tomorrow.