Closing Stock Market SummaryThe stock market opened mostly higher after a few pieces of relatively positive news. Beijing and Shanghai reported zero COVID cases for the first time since February, fueling hope of fully reopening China's economy. In addition, several banks increased their dividend and/or share repurchase plans after the Fed's stress test. Shortly after the open, the Dow, Nasdaq, and S&P 500 gained 1.3%, 1.0%, 1.2%, respectively.
A reversal of trading mentality took hold after the weaker-than-expected Consumer Confidence Index for June at 10:00 a.m. ET. That report conjured stagflation worries with the Expectations Index dropping to its lowest level (66.4) since March 2013 and the year-ahead inflation expectations increasing to 8.0% from 7.5%.
The three main indices couldn't keep the bounce effort going and sold off steadily after that, ultimately finishing near their worst levels of the day. The S&P 500 for its part closed a fraction below Friday's low.
The mega caps did not help sentiment today, showing strong downside leadership that seemingly weighed on most stocks. The Vanguard Mega Cap Growth ETF (MGK) closed down 3.4% versus the Invesco S&P 500 Equal Weight ETF (RSP) which closed down by 1.5%. The Russell 2000 was down 1.9% and S&P Mid Cap 400 was down 1.4%.
In addition, market breadth saw a complete turnaround from where it started the session. Earlier, advancers led decliners at the NYSE by a 2-to-1 margin. By the close, decliners led advancers by a greater than 2-to-1 margin at the NYSE and the Nasdaq.
Ten of the 11 S&P 500 sectors closed in the red with losses ranging from 0.4% (utilities) to 4.0% (consumer discretionary). The lone holdout in the green was energy, up 2.7%.
The energy sector, which closed with all components in the green, benefitted from higher oil prices ($111.96, +2.26, +2.4%), which stemmed from the reopening push in China and a Reuters report indicating Saudi Arabia and the UAE have limited spare capacity to boost output.
The consumer discretionary sector was dragged down by its mega cap components, Amazon.com (AMZN 107.40, -5.82, -5.1%) and Tesla (TSLA 697.99, -36.77, -5.0%), but also Nike (NKE 102.78, -7.72, -7.0%) which reached a new 52-week low following its fiscal Q4 earnings report and soft fiscal Q1 revenue guidance. The few standouts in the sectors included Wynn Resorts (WYNN 59.49, +1.80, +3.12%) and Las Vegas Sands (LVS 34.51, +1.34, +4.0%), which drafted off the China reopening sentiment.
Reviewing today's economic data:
- The Conference Board's Consumer Confidence Index dropped to 98.7 in June ( consensus 101.0) from a downwardly revised 103.2 (from 106.4) in May. This is the lowest reading since February 2021 and compares to 128.9 in the same period a year ago.
- The key takeaway from the report is the sharp drop in consumers' expectations, which was driven primarily by inflation concerns. The Expectations Index sits at a level that is a likely portent of weaker growth in the second half of the year and raises the risk of recession by year end.
- The Advance report for International Trade in Goods in May showed a deficit of $104.3 billion, versus a revised $106.7 billion (from $105.9 billion) in April. The Advance report for Retail Inventories in May rose 1.1% versus the prior month's increase of 0.7%. The Advance report for Wholesale Inventories in May rose 2.0% versus April's revised increased of 2.3% (from 2.1%).
- The S&P Case-Shiller Home Price Index for April was 21.2% (Briefing.com consensus 21.1%) compared to the prior revised reading of 21.1% (from 21.2%). The FHFA Housing Price Index for April was 1.6% compared to the prior revised reading of 1.6% (from 1.5%).
Looking ahead to Wednesday, the weekly MBA Mortgage Applications Index (prior 4.2%) will be released at 7:00 ET. The Q1 GDP Third Estimate (Briefing.com consensus -1.5%; prior -1.5%) and Q1 GDP Deflator Third Estimate (Briefing.com consensus 8.1%; prior 8.1%) will be released at 8:30 ET. The weekly EIA Crude Oil Inventories will be released at 10:30 ET.
- Dow Jones Industrial Average: -14.8% YTD
- S&P 500: -19.8% YTD
- S&P 400: -18.8% YTD
- Russell 2000: -22.6% YTD
- Nasdaq Composite: -28.5% YTD