Closing Stock Market Summary
The major indices closed with solid losses despite an underlying positive bias today. The market-cap weighted S&P 500 fell 0.6% and the equal-weighted S&P 500 closed 0.5% higher. Selling in some of the weightiest stocks picked up in the last half hour of trading, driving the afternoon deterioration that left the major indices near their lows of the day.
NVIDIA (NVDA 1105.00, -43.25, -3.8%), which extended its early loss following a Bloomberg report that the US is slowing the issuing of Middle East licenses for AI chip makers, Microsoft (MSFT 414.67, -14.50, -3.4%), Alphabet (GOOG 173.56, -3.84, -2.2%), and Meta Platforms (META 467.05, -7.31, -1.5%) were losing standouts from the mega cap space.
Dow component Salesforce (CRM 218.01, -53.61, -19.7%) was another influential laggard, sliding 20% on disappointing guidance.
Losses in the aforementioned names led their respective S&P 500 sectors to close with solid declines. The information technology sector fell 2.5% and the communication services sector logged a 1.1% loss.
The remaining nine sectors closed with gains ranging from 0.1% to 1.5%. The only sectors to close more than 1.0% higher were the rate-sensitive real estate (+1.5%) and utilities (+1.4%) sectors, benefitting from a drop in market rates.
The movement in market rates contributed to the underlying upside bias in equities, along with some hopeful anticipation in front of the PCE Price Indexes tomorrow, which is the Fed's preferred gauge on inflation. The 2-yr note yield fell five basis points to 4.93% and the 10-yr note yield declined seven basis points to 4.55%.
The price action in Treasuries follows a slate of economic data this morning, including a downward revision to Q1 GDP, a widening in the goods deficit in April, an ugly 7.7% decline in pending home sales in April, and some otherwise decent initial jobless claims figures.
Market participants were also digesting some mixed earnings news from retailers. Best Buy (BBY 81.55, +9.65, +13.4%) and Foot Locker (FL 25.89, +3.37, +15.0%) were among the winners in that respect. Meanwhile, shares of Kohl's (KSS 21.02, -6.23, -22.9%) and Dollar General (DG 127.94, -11.34, -8.1%) slid after reporting quarterly results.
Separately, the CME Group index pricing for the Dow Jones Industrial Average and S&P 500 briefly froze around 10:41 ET, but began updating as usual around 12:00 ET.
- Nasdaq Composite: +11.5% YTD
- S&P 500:+9.8% YTD
- S&P Midcap 400: +6.0% YTD
- Russell 2000: +1.5% YTD
- Dow Jones Industrial Average: +1.1% YTD
Reviewing today's economic data:
- April Adv. Intl. Trade in Goods -$99.4 bln; Prior was revised to -$92.3 bln from -$91.8 bln
- April Adv. Retail Inventories 0.7%; Prior was revised to 0.1% from 0.3%
- April Adv. Wholesale Inventories 0.2%; Prior -0.4%
- Weekly Initial Claims 219K (consensus 219K); Prior was revised to 216K from 215K; Weekly Continuing Claims 1.791 mln; Prior was revised to 1.787 mln from 1.794 mln
- The key takeaway from the report is that there wasn't any notable change in initial jobless claims. They continue to comply with a generally solid labor market, the idea of which will comply with the market's soft landing outlook.
- Q1 GDP - Second Estimate 1.3% (consensus 1.3%); Prior 1.6%; Q1 GDP Deflator - Second Estimate 3.0% (consensus 3.1%); Prior 3.1%
- The key takeaway from the report is the weakening in consumer spending activity, yet it should be noted that the 2.0% growth was in-line with average for the prior eight quarters. In other words, spending was weaker than the fourth quarter, but not weak enough to alter the market's soft landing outlook.
- April Pending Home Sales -7.7% (consensus -0.5%); Prior was revised to 3.6% from 3.4%
Friday's economic calendar features:
- 8:30 ET: April Personal Income (consensus 0.3%; prior 0.5%), Personal Spending (Briefing.com consensus 0.3%; prior 0.8%), PCE Prices (consensus 0.3%; prior 0.3%), and Core PCE Prices consensus 0.3%; prior 0.3%)
- 9:45 ET: May Chicago PMI (consensus 41.0; prior 37.9