Closing Market Summary: Averages End Near Highs Ahead of Jobs ReportThe stock market ended the Thursday affair on a flat note as a reversal in oil facilitated a rebound in the broader market. The S&P 500 gained 0.4% and closed above the psychological 2100 price level. Focal points for today's trade included a modest uptick in the dollar, a rally in Treasuries, and the outperformance of the heavyweight health care (+1.3%) and consumer discretionary (+0.5%) spaces. The Nasdaq Composite (+0.4%) ended ahead of the Dow Jones Industrial Average (+0.3%) and the S&P 500 (+0.3%).
Today was a busy day on the macroeconomic front with both the European Central Bank and the Organization of the Petroleum Exporting Countries holding their meetings.
The biannual OPEC meeting failed to result in an agreement to establish an output ceiling. Furthermore, the group agreed on no other apparent means of curbing excess production. However, crude oil staged a rebound as investors shifted their attention to the Department of Energy's weekly stockpile report. The Energy Information Administration reported that crude oil inventories shrank by 1.36 million barrels, compared to the estimated 2.49 million barrel draw. Meanwhile, gasoline inventories declined by 1.49 million barrels, compared to the estimated 0.15 million barrel draw. As a result, oil ended its day with a marginal gain ($49.14/bbl; +$0.08; +0.2%).
In central bank news, the ECB maintained its monetary policy stance, leaving its interest rate corridor unchanged. However, ECB President Mario Draghi did state that risks are tilting to the downside and that interest rates will remain at their present levels, or lower, for an extended period of time. The policy statement and press conference went largely as expected.
Equity indices gapped down at the beginning of the session as the downturn in crude oil weighed on the broader market. The S&P 500 (+0.3%) index ticked down to the 2088/2089 price level before finding its bearings. The benchmark index climbed through the session, ending at its best level of the day (2105.26). Seven sectors ended in the green with health care (+1.3%), telecom services (+0.5%), and consumer discretionary (+0.5%) leading. On the flipside, energy (-0.3%), technology (-0.1%), utilities (-0.1%) rounded out the board.
Biotechnology demonstrated relative strength in the health care space (+1.3%), as the iShares Nasdaq Biotechnology ETF (IBB 286.28, +5.10) extended its weekly gain to 3.3%. AbbVie (ABBV 65.09, +2.26) rallied 3.6% after announcing an accelerated share repurchase agreement. Elsewhere, Medtronic (MDT 82.99, +2.47) notched a new all-time high ($83.29). The broader sector has gained 1.8% this week, compared to a gain of 0.3% in the benchmark index and a gain of 0.8% in the tech-heavy Nasdaq.
In the consumer discretionary group (+0.5%), retail names demonstrated relative strength, responding to better-than-feared comparable store sales readings for May. L Brands (LB 71.33, +2.92) jumped 4.3% after reporting flat sales over that period. Gap (GPS 18.33, +0.46) and Macy's (M 34.35, +1.32) gained 2.6% and 4.0%, respectively. The broader SPDR S&P Retail ETF (XRT 42.95, +0.49) gained 1.2%, trimming its yearly loss to 0.7%.
The influential technology sector (-0.1%) underperformed as large cap Oracle (ORCL 38.66, -1.60) declined by 4.0%. The stock saw pressure from a lawsuit brought on by a former company accountant, who alleged that sales figures were altered. Elsewhere, Alphabet (GOOGL 744.27, -4.19), Microsoft (MSFT 52.48, -0.37), and Apple (AAPL 97.72, -0.74) ended with losses between 0.6% and 0.8%.
The U.S. Dollar Index (95.56, +0.10) ended modestly higher as the greenback gained against commodity currencies and the euro. The euro/dollar pair ended lower by 0.4% (1.1149) while the dollar gained 0.2% against the Canadian dollar (1.3104).
Treasuries finished higher with the yield on the 10-yr note sliding four basis points to 1.80%.
Today's participation was above the recent average with more than 952 million shares changing hands at the NYSE floor.
Today's economic data included Challenger Job Cuts for May, the ADP Employment Change Report for May, and weekly initial claims:
- The Challenger Job Cuts report for May revealed 30,200 job cut announcements since April, marking a decline of 26.5% on a year-over-year basis.
- The ADP Employment Change report was close to the market's mark. Private sector jobs were estimated to have increased by 173,000 (consensus 180,000)
- This followed an upwardly revised 166,000 increase (from 156,000) for April.
- The May job growth was driven exclusively by the service-providing sector, which added 175,000 positions.
- The goods-producing sector saw a decline of 1,000.
- Small businesses added the most jobs (76,000) followed by medium-sized businesses (63,000), and then large businesses (34,000).
- This ADP report won't alter the market's expectations for the nonfarm payrolls report on Friday (consensus 155,000).
- Some might be bothered by job growth being below 200,000 again, yet it is still at levels that will be seen as healthy by the Federal Reserve.
- Initial claims for the week ending May 28 dipped by 1,000 to 267,000 (consensus 268,000).
- There were no special factors influencing initial claims, which were below 300,000 for the 65th straight week.
- The four-week moving average for initial claims fell from 278,500 to 276,750.
- The latest initial claims report seems to fit the Fed's script, which points to labor market strength.
- Continuing claims for the week ending May 21 increased by 12,000 to 2.172 million.
- The four-week moving average for this series jumped from 2.151 million to 2.163 million.
Tomorrow's economic data will include the Employment Situation Report for May (consensus 155k) and the April Trade Balance (consensus -$41.6 billion), which will both cross the wires at 8:30 ET. Meanwhile, Factory Orders for April (consensus +1.6%) and ISM Services for May (consensus 55.4) will be released at 10:00 ET.
- S&P 500 +3.0% YTD
- Russell 2000 +3.0% YTD
- Dow Jones +2.4% YTD
- Nasdaq -0.7% YTD