Closing Market Summary: Nasdaq Composite hits record high ahead of inflation data
With little in the way of macro catalysts or corporate news, the major averages traded sideways for much of the session before an uptick in buying activity saw the Nasdaq Composite (+0.4%) establish a new record high (21,891.42) and closing high, while the S&P 500 (+0.3%) and DJIA (+0.4%) captured record closing highs of their own.
The major averages benefitted from broad-based sector strength, with the communication services sector (+1.7%) leading the way, supported by strong leadership in its mega-cap components, Alphabet (GOOG 239.94, +5.78, +2.47%) and Meta Platforms (META 765.70, +13.40, +1.78%).
Mega-caps as a unit had a relatively subdued session, though they especially benefitted from the late afternoon buying pickup. The Vanguard Mega Cap Growth ETF (+0.3%) closed with a decent gain after spending the day oscillating around its flatline.
Yesterday's top movers, the information technology (flat) and consumer discretionary (+0.1%) sectors, clawed just above their opening levels after a long stint in negative territory, though their improvement was particularly supportive to the final standings of the S&P 500 and Nasdaq Composite.
While today's advances were modest in nature, they were broad-based, as only the materials (-1.6%), industrials (-0.7%), and real estate (-0.1%) sectors finished lower.
Despite a scarcity of corporate headlines, UnitedHealth (UNH 348.18, +27.93, +8.72%) made a significant upward move following amendments to the company's guidance disclosure.
Meanwhile, Apple (AAPL 234.35, -3.53, -1.48%) traded lower following the company's annual product launch event, with investor focus on iPhone pricing. The iPhone Air will debut at $999 as the slimmer entry model, while the price of the iPhone Pro rose by $100 to $1,099.
There were no notable economic data releases today, though attention centered on the preliminary benchmark revision to payroll growth estimates for March 2024-March 2025. The revision showed a record overstatement of 911,000 jobs, confirming expectations for a significant downward adjustment.
The stock market had a muted reaction to the revision, as rate cut expectations hardly changed in response. The market is still fully pricing in a 25-basis point rate cut at the September FOMC meeting, while the CME FedWatch assigns an 8.2% probability of a 50-basis point cut, down from 10.6% yesterday.
While smaller cap indices might have gained momentum in response to heightened expectations for a 50-basis point cut, the Russell 2000 retreated 0.6%, with the S&P Mid Cap 400 slipping 0.9%.
Market focus now turns to tomorrow's release of August PPI data, with CPI to follow on Friday. Those inflation readings, if hotter than expected, could revive concerns about the broader health of the economy and test the market's conviction in its current rate cut expectations for the October and December FOMC meetings.
U.S. Treasuries retreated on Tuesday, making for a shallow pullback after four days of gains that sent yields to their lowest levels in at least three months. There was some light buying after the U.S. Treasury kicked off this week's note and bond auction slate with a strong sale of 3-year notes that saw stellar foreign demand. The 2-year note yield settled up five basis points to 3.54% and the 10-year note yield settled up three basis points to 4.72%.
- Nasdaq Composite: +13.3% YTD
- S&P 500: +10.7% YTD
- DJIA: +7.4% YTD
- Russell 2000: +6.8% YTD
- S&P Mid Cap 400: +4.7% YTD
Reviewing today's economic data:
- The NFIB Small Business Optimism Index rose to 100.8 in August from 100.3 in July.