Closing Market Summary: Stocks Inch Higher as Energy LeadsThe stock market ended a range-bound day on a flat note as caution prevailed despite yesterday's dovish FOMC minutes from the July meeting. The S&P 500 (+0.2%) maintained a seven-point range, crossing into positive territory for the week (week-to-date:+0.1%).
Equity indices struggled for direction as investors continued to adjust rate hike expectations for the year. Yesterday's release of the FOMC minutes for July indicated that Fed officials were divided on whether or not an interest rate hike would be appropriate in coming months. Specifically, concerns about the sustainability of recent hiring trends and consistently weak inflation readings compelled some members to hold off on raising rates.
New York Fed President and FOMC voter William Dudley, however, maintained a somewhat hawkish tone. The Fed President stated that a rate hike remains in the cards at the September FOMC meeting. Mr. Dudley also indicated that two strong employment reports helped offset his prior concerns regarding U.S. labor markets. Participants shrugged off the commentary as it mirrored comments from earlier in the week. Investors will hear from San Francisco Fed President Williams (non-FOMC voter) and Dallas Fed President Kaplan (non-FOMC voter) at 16:00 ET and 20:00 ET, respectively.
The market inched higher in the early going, but reversed from its morning high after CNBC reported that influential hedge fund manager Paul Singer warned his investors that the bond market appears "broken" and that a loss of confidence in central bank policy could facilitate a broader market downturn. Mr. Singer's concerns come after other influential investors like George Soros and Carl Icahn have complained about market participants being in the dark due to low/negative interest rates in most sovereign bonds.
The S&P 500 (+0.2%) at its session high, testing resistance near the 2186/2188 price level. Seven sectors ended in the green with materials (+0.7%), utilities (+1.2%), and energy (+1.8%) leading the advance. Conversely, consumer discretionary (-0.1%) and telecom services (-0.8%) lagged the broader market.
The influential technology sector (+0.1%) finished roughly in-line with the market as strength in high-beta chipmakers outweighed a downturn in Dow component Cisco Systems (CSCO 30.48, -0.24). The stock ended lower by 0.8% as disappointing first-quarter revenue guidance masked a bottom-line beat.
In the consumer discretionary space (-0.1%), home improvement retailers underperformed, marking a weak sport in the broader retail sub-group. The SPDR S&P Retail ETF (XRT 45.75, +0.41) finished higher by 0.9% as better-than-expected bottom-line results from L Brands (LB 77.87, +3.81) bolstered the group. The ETF also benefited from above-consensus bottom-line results from Dow component Wal-Mart (WMT 74.30, +1.37).
The commodity-sensitive energy space (+1.8%) buttressed the broader market as the energy component finished higher by 3.0% ($48.21/bbl; +$1.40). Dow components Exxon Mobil (XOM 88.91, +0.80) and Chevron (CVX 103.55, +1.33) ended with gains of 0.9% and 1.3%, respectively.
The Dow Jones Transportation Average (+0.5%) settled ahead of the broader market as rail names outperformed. In the group, Union Pacific (UNP 95.83, +1.26) and Norfolk Southern (NSC 91.67, +1.85) ended higher by 1.3% and 2.1%, respectively.
Treasuries ended the day on a higher note as the short-end of the curve enjoyed a decent bid. The yield on the 2-yr note settled lower by two basis points (0.71%) while the yield on the benchmark 10-yr note slipped one basis point to 1.53%.
Today's participation was below the recent average as fewer than 737 million shares changed hands at the NYSE floor.
Today's economic data included weekly initial claims, the Philadelphia Fed Survey for August, and Leading Indicators for July:
- Initial claims for the week ending August 13 slipped to 262,000 (consensus 265,000) from last week's unrevised level of 266,000.
- The key takeaway from the report is that it will feed expectations for another month of strong nonfarm payrolls gains.
- Continuing claims for the week ending August 6 jumped 15,000 to 2.175 million.
- The Philadelphia Fed Index for August produced a positive surprise, checking in at 2.0 (consensus +0.6) after a negative 2.9 reading in July.
- The report wasn't as positive as it appears at first blush considering higher prices, versus new order activity, drove the strength.
- The Conference Board's Leading Economic Index for July increased 0.4%, as expected by the consensus estimate, on top of an unrevised 0.3% increase in June.
- The increase was a broad-based affair. Only one index component -- average consumer expectations for business conditions -- made a negative contribution (-0.05 percentage points).
For further details on these economic releases, be sure to visit Economic Calendar page.
There is no economic data of note scheduled to be released tomorrow.