Closing Stock Market SummaryIt was a choppy day for the stock market with the major indices sticking to a narrow range, though with volatile price action. The indices set early session lows before rolling along the rest of the day above those levels. There was more of a negative bias than what the major indices showed.
Rate hike and growth concerns weighed on trading mentality. There was little conviction from the buyers today as evidenced by the advance-decline line. Decliners led advancers by a roughly 2-to-1 margin at both the NYSE and Nasdaq.
Another factor that showed growth concerns were the mega caps which outperformed the broader market. The Vanguard Mega Cap Growth ETF (MGK) closed up 0.3% compared to the 0.6% loss in the Invesco S&P 500 Equal Weight ETF (RSP). The Russell 2000 and S&P Mid Cap 400 were down 1.2% and 0.8%, respectively.
Of the 11 S&P 500 sectors, six closed in the green. Some of the outperformers were counter-cyclical sectors, including health care (+0.9%), consumer staples (+0.5%), and utilities (+0.1%).
The cyclical sectors lagged today. The energy (-3.4%), real estate (-0.8%), materials (-0.7%), financials (-0.6%), and industrials (-0.6%) sectors all closed in the red, further fueling the growth concern narrative.
Rate hike concerns were fueled this morning by Cleveland Fed President Mester (FOMC voter) saying she would advocate for another 75 basis point rate hike in July if conditions remain the same. Fed Chair Powell for his part acknowledged at an ECB forum that the importance of fighting inflation is worth the risk of slowing economic activity too much, which was another way of saying that it will be challenging for the Fed to achieve a soft landing.
Treasury yields closed lower. The 10-yr note yield fell 11 basis points to 3.09% and the 2-yr note yield fell seven basis points to 3.07% in a curve-flattening trade.
Reviewing today's economic data:
- Q1 GDP - Third Estimate -1.6% ( consensus -1.5%); Prior -1.5%; Q1 GDP Deflator - Third Estimate 8.2% (consensus 8.1%); Prior 8.1%
- The key takeaway from the report is that consumer spending wasn't as strong as previously reported. Personal consumption expenditures increased just 1.8% in the first quarter versus the second estimate, which showed growth of 3.1%.
- Weekly MBA Mortgage Applications Index 0.7%; Prior 4.2%
- EIA Crude Oil Inventories had a draw of 2.76 mln barrels (prior week showed a build of 1.96 mln barrels) and gasoline inventories had a build of 2.56 mln barrels (prior week showed a draw of 710K barrels)
Looking ahead to Thursday, the Personal Income (Briefing.com consensus 0.5%; prior 0.4%), Personal Spending (Briefing.com consensus 0.5%; prior 0.9%), PCE Price Index (consensus 0.7%; prior 0.2%), and the Core PCE Price Index (consensus 0.3%; prior 0.3%) for May will be released at 8:30 a.m. ET. The weekly initial jobless claims (consensus 234,000; prior 229,000) and continuing claims (prior 1.315 million) will also be released at 8:30 a.m. ET. The Chicago PMI consensus 58.8; prior 60.3) for June will be released at 9:45 a.m. ET. The weekly EIA Natural Gas Inventories (prior +74 bcf) will be released at 10:30 a.m. ET.
- Dow Jones Industrial Average: -14.6% YTD
- S&P 500: -19.9% YTD
- S&P 400: -19.4% YTD
- Russell 2000: -23.4% YTD
- Nasdaq Composite: -28.6% YTD