Closing Stock Market SummaryToday's trade shaped up to be fairly upbeat despite a mixed performance at the index level. Considering the scope of mega cap losses, the major indices held up well on higher than average trading volume. The Russell 2000 was a winning standout again, gaining 1.8%.
Amazon.com (AMZN 121.23, -5.38, -4.3%), Alphabet (GOOG 122.94, -4.97, -3.9%), Microsoft (MSFT 323.38, -10.30, -3.1%), and NVIDIA (NVDA 374.81, -11.68, -3.0%) all saw large declines today, falling prone to profit taking after a big run and to some valuation angst. Apple (AAPL 177.82, -1.39, -0.8%) also logged a loss for the session. The Vanguard Mega Cap Growth ETF (MGK) fell 1.7%.
Still, the broader market exhibited relative strength. The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.7% as money flowed away from the mega cap space and into other areas with a bias toward economically-sensitive sectors. The market-cap weighted S&P 500, which ran into some resistance after hitting 4,299 in the early going, declined by a modest 0.4%.
The Russell 2000 was boosted by its energy and regional bank components. The SPDR S&P Regional Banking ETF (KRE) rose 3.3%. The S&P 500 energy sector (+2.7%) led its peers by a wide margin.
Other top performers included the cyclical materials (+1.2%) and industrials (+1.6%) sectors.
Lagging mega cap components weighed down the communication services (-1.9%), information technology (-1.6%), and consumer discretionary (-0.9%) sectors.
Rising market rates were another limiting factor for mega caps and other growth stocks. Treasuries saw an uptick in selling after the Bank of Canada surprised market participants with a 25 basis points rate hike to 4.75%; however, losses were pared late in the day as the mega cap stocks tracked toward their lows for the session. The 2-yr note yield rose two basis points to 4.55% and the 10-yr note yield rose nine basis points to 3.78%.
- Nasdaq Composite: +25.2% YTD
- S&P 500: +11.2% YTD
- Russell 2000: +7.2% YTD
- S&P Midcap 400: +5.7% YTD
- Dow Jones Industrial Average: +1.6% YTD
Reviewing today's economic data:
- The weekly MBA Mortgage Applications Index fell 1.4% with purchase applications declining 2.0% and refinancing applications falling 1.0%.
- The U.S. trade deficit widened to $74.6 billion in April consensus -$75.3 billion) from an upwardly revised $60.6 billion (from -$64.2 billion) in March, which was recalculated with annual revisions to the goods and services series. The widening deficit in April was the result of exports being $9.2 billion less than March exports and imports being $4.8 billion more than March imports.
- The key takeaway from the report is the drop in exports, which reflects weakening demand abroad for U.S. goods.
- The weekly EIA Crude Oil Inventories showed a draw of 451,000 barrels after a build of 4.49 million barrels last week.
- Consumer credit increased by $23.0 bln in April ( consensus $21.0 bln) following a downwardly revised $22.9 bln (from $26.5 bln) in March.
- The key takeaway from the report is that the pace of credit expansion in April was driven by revolving credit, which is apt to stoke concerns that consumers, battling inflation, are relying more on the use of credit cards to maintain their spending activity.
Looking ahead to Thursday, market participants will receive the following economic data:
- 8:30 a.m. ET: Weekly initial (consensus 237,000; prior 232,000) and continuing (prior 1.795 million) jobless claims
- 10:00 a.m. ET: April Wholesale Inventories ( consensus -0.2%; prior 0.0%)
- 10:30 a.m. ET: Weekly EIA Natural Gas Inventories (prior +110 bcf)