Closing Market Summary: S&P 500 Settles Below 200-Day Average After Daylong Retreat From Opening High
The major averages registered gains on Thursday, but not before enduring a daylong retreat from their opening highs. The S&P 500 was up more than 1.3% at the start, but narrowed its advance to 0.2% by the closing bell.
Equity indices charged out of the gate after the overnight session featured a rebound in China's Shanghai Composite, which climbed 5.8%. The advance occurred as officials in China continued introducing measures aimed at halting the recent market plunge with reports indicating a special taskforce targeting "hostile short-sellers" will be established by China's Public Security Ministry and China Securities Regulatory Commission.
Elsewhere, optimistic-sounding remarks from top Eurozone officials also contributed to the opening strength as European Council President Donald Tusk said he expects Greece to submit concrete, realistic reform proposals today. Mr. Tusk continued, saying the proposals must be matched by an offer from creditors that focuses on debt sustainability.
The opening spike sent the S&P 500 above its 200-day moving average (2,056), but the index returned below that mark during the afternoon. Cyclical sectors displayed broad strength in the early going, but the top-weighed technology sector (-0.3%) faded from its high during the afternoon, ending among the laggards. In general, large cap names held up well, but the largest stock by market cap—Apple (AAPL 120.07, -2.50)—surrendered 2.0%, contributing to the sector's afternoon pullback. In addition, high-beta chipmakers continued their recent woes with the PHLX Semiconductor Index falling 1.3% to extend this week's decline to 5.7%.
Meanwhile, the remaining cyclical sectors also pulled back from their highs, but they managed to end the day ahead of the broader market. The financial sector (+0.8%) had the best showing, settling in the top half of its trading range. The sector likely drew some strength from higher market rates as Treasuries retreated throughout the day with the 10-yr yield jumping 11 basis points to 2.31%.
Also of note, the industrial sector (+0.4%) finished among the leaders thanks to relative strength among transport stocks. The Dow Jones Transportation Average rose 0.6% to narrow this week's loss to 0.9%. JB Hunt (JBHT 84.02, +1.77) was a standout performer, rallying 2.2% after Longbow upgraded the stock to ‘Buy' from ‘Neutral.'
With the Q2 earnings season about to heat up, investors received the first few reports with Alcoa (AA 10.59, +0.09) climbing 0.9% after reporting a bottom-line miss on better than expected revenue. The company reaffirmed its global aluminum demand growth forecast of 6.0%.
Over on the countercyclical side, the consumer staples sector (+0.1%) ended among the laggards with PepsiCo (PEP 94.59, -1.02) surrendering 1.1% despite beating estimates and raising its earnings growth forecast.
Despite the higher finish, there were plenty of investors seeking downside protection today with the CBOE Volatility Index (VIX 19.91, +0.25) climbing above yesterday's session high.
Today's participation was ahead of average with more than 800 million shares changing hands at the NYSE floor.
Economic data was limited to weekly Initial Claims, which increased to 297,000 for the week ending July 4 from an upwardly revised 282,000 (from 281,000) while the consensus expected a decrease to 276,000. Today's reading represented the highest level since the end of February when claims briefly surpassed 300,000.
The Department of Labor reported that there were no special factors that impacted the latest claims reading, but it is possible that the Independence Day holiday factored into the increase.
Tomorrow, the Wholesale Inventories report for May will be released at 10:00 ET (consensus 0.3%).
- Nasdaq Composite +3.9% YTD
- Russell 2000 +2.4% YTD
- S&P 500 -0.4% YTD
- Dow Jones Industrial Average -1.5% YTD