Closing Stock Market Summary: Rebound effort held up ahead of jobs reportThe stock market was looking to keep the momentum going from yesterday, and it did just that. The market opened on a high note and built on those gains with each of the three main indices exhibiting a gain of at least 1.0% at the close. With a gain of 1.5%, the S&P 500 closed just above the 3,900 level.
Buyers showed up today to support the rebound effort as evidenced by market breadth. Advancers led decliners by a roughly 3-to-1 margin at both the NYSE and the Nasdaq.
There were a few factors acting like a positive feedback loop to the buying effort. The bounce coincided with the price action reversal in energy futures and the strength in semiconductors, which hold a leading indicator status.
Energy futures were increasing all day but natural gas futures saw a sharp upturn after the EIA natural gas inventories report this morning. They settled the session up 13.6% to $6.25/mmbtu. WTI crude oil futures settled the session up 4.0% to $102.68/bbl. Unleaded gasoline futures rose 7.0% to $3.68/gal.
Semiconductors had a good showing today with the PHLX Semiconductor Index closing up 4.5%. Every index component closed in the green with the biggest gains seen in ON Semiconductors (ON 51.94, +4.33, +9.1%), KLA Corp (KLAC 314.54, +21.54, +7.4%), and TSMC (TSM 80.75, +5.19, +6.7%).
Copper, another leading indicator commodity, saw big upside moves today, rising 3.5% to $3.55/lb.
Ten of the 11 S&P 500 sectors closed in positive territory with the lone laggard being utilities (-0.1%). Fellow countercyclical sectors, consumer staples (+0.1%) and health care (+0.1%), closed in the green but trailed behind the broader market.
The top performing sectors were energy (+3.5%), consumer discretionary (+2.5%), information technology (+2.1%), and communication services (+2.0%).
Despite the bounce, the 2s10s spread remains inverted. The 2-yr Treasury note yield rose nine basis points to 3.03% while the 10-yr note yield rose ten basis points to 3.01%.
Reviewing today's economic data:
- Weekly Initial Claims 235K (Briefing.com consensus 234K); Prior 231K; Weekly Continuing Claims 1.375 mln; Prior was revised to 1.324 mln from 1.328 mln
- The key takeaway from the report is that claims have spent the past few weeks in a narrow range, suggesting little room left for improvement.
- May Trade Balance -$85.5 bln (consensus -$84.9 bln); Prior was revised to -$86.7 bln from -$87.1 bln
- The key takeaway from the report is that the deficit with China decreased by $2.8 bln to $32.2 bln, though this was largely due to reduced manufacturing activity as China implemented coronavirus lockdowns.
- Crude oil inventories had a build of 8.24 mln barrels
- Prior week showed a draw of 2.76 mln barrels
- Gasoline inventories had a draw of 2.50 mln barrels
- Prior week showed a build of 2.56 mln barrels
Looking ahead to Friday, market participants will receive the following economic data:
- 8:30 ET: June Nonfarm Payrolls ( consensus 250,000; prior 390,000), Nonfarm Private Payrolls (consensus 275,000; prior 333,000), Unemployment Rate (consensus 3.6%; prior 3.6%), Average Hourly Earnings ( consensus 0.3%; prior 0.3%), and Average Workweek (Briefing.com consensus 34.6; prior 34.6)
- 10:00 ET: May Wholesale Inventories (prior 2.2%)
- 15:00 ET: May Consumer Credit (prior $38.00 bln)
- Dow Jones Industrial Average: -13.6% YTD
- S&P 400: -18.1% YTD
- S&P 500: -18.2% YTD
- Russell 2000: -21.2% YTD
- Nasdaq Composite: -25.7% YTD