Closing Stock Market SummaryThere was some up and down price action today in a narrow trading range, leading to a mixed market that followed form with mixed earnings results and mixed economic data. Fresh buying interest in the final hour of trading sent the major indices to new session highs before losing steam and dipping into the close. There was a lack of conviction on either side of the tape and volume was on the lighter side today.
Mixed action saw the mega caps trading roughly in line with the broader market while small and mid cap stocks outperformed. The Vanguard Mega Cap Growth ETF (MGK) closed up 0.1% versus a 0.3% gain in the Invesco S&P 500 Equal Weight ETF (RSP) and a 0.2% gain in the S&P 500. The Russell 2000 (+0.7%) and S&P Mid Cap 400 (+0.8%) closed ahead of the major indices.
Market breadth showed the lack of conviction for either side of the tape. Advancers led decliners by a 7-to-5 margin at the NYSE and an 11-to-10 margin at the Nasdaq.
Semiconductor related names had a strong showing thanks to Wolfspeed's (WOLF 112.94, +27.29, +31.9%) favorable quarterly results and guidance. The PHLX Semiconductor Index closed up 2.2%. The strength here helped propel the information technology sector (+0.5%) to second place on the day.
Cisco's (CSCO 49.37, +2.71, +5.8%) earnings-driven gains also boosted the information technology sector.
Bath & Body Works (BBWI 40.26, +0.07, +0.2%) and Tapestry (TPR 37.57, +0.46, +1.2%) offered some support to the consumer discretionary sector (-0.04%) after reporting quarterly results but Tesla's (TSLA 908.61, -3.38, -0.4%) modest loss weighed on sector performance. Kohl's (KSS 31.33, -2.62, -7.7%), though not a sector component, also weighed on performance as retail peers traded down in solidarity.
Rising oil prices sent the energy sector (+2.5%) to the top of the leaderboard. Notably, it was the only sector to move more than 1.0% in either direction. WTI crude oil futures rose 2.4% to $90.07/bbl.
Separately, several Fed officials made comments today, including Minneapolis Fed President Kashkari (2023 FOMC voter) saying he does not know if the Fed can bring inflation down without triggering a recession. Saint Louis Fed President Bullard (2022 FOMC voter) said he is leaning towards a 75 basis point rate hike in September and is not sure the worst of inflation has passed, according to The Wall Street Journal. Kansas City Fed President George (2022 FOMC voter) said there is still a significant difference between supply and demand in the economy, adding she is encouraged by the July inflation report, but it's not a time for a "victory lap."
Treasury yields settled lower in a choppy session. The 2-yr note yield fell five basis points to 3.22% while the 10-yr note yield fell one basis point to 2.88%.
Deere (DE) and Foot Locker (FL) report earnings ahead of Friday's open.
There is no U.S. economic data of note out tomorrow.
Reviewing today's economic data:
- Weekly initial jobless claims totaled 250,000 (consensus 266,000) after last week's revised total of 252,000 (from 262,000). Continuing claims totaled 1.437 million after last week's revised total of 1.430 million (from 1.428 million).
- The key takeaway from the report is twofold: first, the initial claims level is still a long way from recession levels; and secondly, this report covers the week in which the survey for the August employment report was conducted. The low level of initial jobless claims supports expectations for continued strength in nonfarm payrolls, which of course should support continued tightening moves by the Federal Reserve.
- The Philadelphia Fed Index improved to 6.2 in August (consensus -4.0) from -12.3 in July. The new orders index, though, remained stuck in negative territory at -5.1, which qualified as an improvement from the -24.8 reading seen in July.
- The key takeaway from the report was the recognition that firms expect overall declines six months from now, evidenced by a -10.6 reading in the future index versus -18.6 in July.
- Existing home sales decreased 5.9% month-over-month in July to a seasonally adjusted annual rate of 4.81 million ( consensus 4.85 million) versus a downwardly revised 5.11 million (from 5.12 million) in June. That is the sixth straight month that existing home sales have fallen. Total sales in July were down 20.2% from a year ago.
- The key takeaway from the report is that higher mortgage rates are taking a bite out of existing home sales, having compounded affordability pressures that persist with still-high (although moderating) prices.
- Weekly EIA Natural Gas Inventories showed a build of 18 bcf versus a build of 44 bcf last week.
Dow Jones Industrial Average: -6.4% YTD
S&P 400: -7.8% YTD
S&P 500: -10.1% YTD
Russell 2000: -10.9% YTD
Nasdaq Composite: -17.1% YTD