Closing Stock Market SummaryThe S&P 500 fell 0.9% on Tuesday, as sellers first reined in the value/cyclical stocks then targeted the technology stocks late in the day. The Nasdaq Composite declined 0.6%, the Dow Jones Industrial Average declined 0.8% and the Russell 2000 declined 0.7%. Both the Nasdaq and Russell 2000 coughed up 0.8% intraday gains.
The "peak growth" narrative was a main talking point in the morning after April housing starts fell 9.5% m/m to a seasonally adjusted annual rate of 1.569 million units (Briefing.com consensus 1.715 million). In addition, Home Depot (HD 316.75, -3.26, -1.0%) and Macy's (M 19.09, -0.07, -0.4%) were unable to key off their earnings reports, which featured impressive yr/yr revenue growth.
Accordingly, the cyclical energy (-2.6%), industrials (-1.5%), financials (-1.4%), and materials (-1.1%) sectors were among the biggest laggards today. Investors leaned defensively toward the health care (+0.1%) and real estate (+0.2%) sectors, which were the only sectors that closed higher.
The cyclical stocks were arguably vulnerable to profit-taking interest, so that wasn't the most disappointing aspect of the session. Instead, the real disappointment was the information technology sector (-0.8%), which gave up an early leadership position and turned negative late in the day.
Many have been keeping an eye on this recently forlorn technology sector, and other growth stocks, to pick up the slack. Unfortunately, dip-buyers were flaky today, thereby keeping a lid on risk sentiment and keeping the S&P 500 within a consolidation trend. Note, the tech sector is the market's most heavily-weighted sector.
Separately, Walmart (WMT 141.91, +3.02, +2.2%) was an individual standout following its better-than-expected earnings report and upbeat guidance.
U.S. Treasuries settled little changed in a relatively tight-ranged session. The 2-yr yield was flat 0.15%, and the 10-yr yield was flat at 1.64%. The U.S. Dollar Index decreased 0.4% to 89.78. WTI crude futures decreased 1.1%, or $0.72, to $65.51/bbl.
Reviewing Tuesday's economic data:
- Total housing starts declined 9.5% month-over-month to a seasonally adjusted annual rate of 1.569 million units (consensus 1.715 million). Total permits rose just 0.3% month-over-month to 1.760 million, as expected.
- The key takeaway from the report is in the breakdown, which showed zero growth in starts and permits for single-family homes across all regions, presumably as expansion plans were undercut by rising costs for land, labor, and materials.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday.
- Russell 2000 +12.0% YTD
- Dow Jones Industrial Average +11.3% YTD
- S&P 500 +9.9% YTD
- Nasdaq Composite +3.2% YTD % Nasdaq -