Closing Market Summary: Stocks Snap Two-Day Skid
The stock market snapped its two-day skid with a Thursday advance that lifted the S&P 500 (+0.4%) into the neighborhood of its 50-day moving average (2,089). The benchmark index narrowed its week-to-date loss to 1.0% while the Nasdaq Composite (+0.5%) outperformed, but remains down 1.2% for the week.
Equity indices vacillated near their flat lines during the opening hour and followed their shaky start with a broad-based rally. However, the cash market masked the fact that S&P 500 futures were down more than 15 points overnight. That weakness coincided with selling in the Treasury market, which abated once the benchmark 10-yr yield kissed the 2.30% level. To be fair, the overnight selloff in Treasuries did not take place in a vacuum as Germany's 10-yr bund endured a sharp plunge that briefly sent its yield as high as 0.79%. German bunds were able to retrace the entire move, returning to 0.59% while U.S. Treasuries did that and then some. The 10-yr note rallied throughout the session, dropping its yield six basis points to 2.18% and back below the 200-day moving average (2.19%).
In all likelihood, the Treasury market will be in focus once again tomorrow once the Nonfarm Payrolls report for April crosses the wires at 8:30 ET (consensus 218K).
Nine sectors finished the day in positive territory with heavily-weighted sectors like technology (+0.7%), financials (+0.7%), industrials (+0.6%), and health care (+0.5%) driving the advance.
The top-weighted technology sector gathered strength throughout the session while high-beta chipmakers outperformed from the get-go. The PHLX Semiconductor Index advanced 1.1% thanks to gains in about 90% of its components.
SunEdison (SUNE 27.96, +3.13) and
Atmel (ATML 7.96, +0.42) led the charge after reporting their quarterly results. Atmel jumped 5.6% after reporting a bottom line beat and issuing cautious guidance while SunEdison surged 12.6% following a loss that was not comparable to analyst estimates.
Staying in the technology space,
Yelp (YELP 47.01, +8.79) spiked 23.0% after the Wall Street Journal reported the company is looking into a potential sale. The intraday spike helped the stock reclaim the bulk of its earnings-driven loss from late April and return above its 50-day moving average (46.80).
Elsewhere, the financial sector was underpinned by large components like
Citigroup (C 53.31, +0.54) and
JPMorgan Chase (JPM 64.50, +0.58) with their strength lifting the sector back into the green for the week. The growth-sensitive group will enter the Friday session with a week-to-date gain of 0.2%.
Over on the countercyclical side, the health care sector (+0.5%) finished ahead of its
peers thanks to strength in biotechnology. The
(IBB 344.11, +3.39) advanced 1.0%, but could not climb above its opening high.
On the downside, the energy sector (-1.1%) spent the day in negative territory as crude oil struggled amid dollar strength. WTI crude slumped 3.2% to $58.98/bbl while the Dollar Index (94.60, +0.51) gained 0.6%.
Today's participation was in-line with recent averages as more than 785 million shares changed hands at the NYSE floor.
Economic data included Initial Claims, Challenger Job Cuts, and Consumer Credit:
- The initial claims level increased to 265,000 for the week ending May 2 from an unrevised 262,000 for the week ending April 25 while the consensus expected an increase to 280,000
- There is no doubt that businesses have actively cut down on their layoff activity. The four-week moving average for initial claims declined to 279,500 from 283,750. For comparison, it was only a little more than a month ago in March wherein the four-week moving average was stable over 300,000
- In the entire history of the data set, the four-week moving average has been below 280,000 only a handful of times. The last time was in May 2000
- The April Challenger Job Cuts report indicated that planned layoffs increased 52.8% year-over-year to follow the prior 6.4% increase
- Total outstanding consumer credit increased by $20.50 billion in March after increasing a downwardly revised $14.80 billion (from $15.50 billion) in February while the consensus expected an increase of $16.00 billion
- That was the biggest increase in consumer credit since a gain of $21.50 billion in July 2014
Tomorrow, the Nonfarm payrolls report for April (consensus 218K) will be released at 8:30 ET while March Wholesale Inventories will be reported at 10:00 ET (consensus 0.3%).
- Nasdaq Composite +4.4% YTD
- Russell 2000 +1.7% YTD
- S&P 500 +1.4% YTD
- Dow Jones Industrial Average +0.6% YTD