Closing Stock Market SummaryThe S&P 500 gained 1.3% on Tuesday, recovering yesterday's decline in a mostly broad-based advance. The Dow Jones Industrial Average (+2.1%) and Russell 2000 (+1.8%) had strong performances with roughly 2% gains, while the Nasdaq Composite (+0.9%) underperformed.
The market stumbled out of the gate after JPMorgan Chase (JPM 98.21, +0.56, +0.6%), Citigroup (C 50.15, -2.05, -3.9%), and Wells Fargo (WFC 24.25, -1.16, -4.6%) reported large provisions for credit losses in their Q2 earnings reports. While large provisions reflect a challenging economic environment for the banks, investors were willing to stay in the market.
All 11 S&P 500 sectors closed higher, with the best performers found in the cyclical energy (+3.6%), materials (+2.5%), and industrials (+2.2%) sectors. A strong finish in the market carried the consumer discretionary (+0.6%) and financials (+0.7%) sectors into positive territory.
Shares of Amazon (AMZN 3084.00, -20.00, -0.6%) were down as much as 5.0% in early action alongside many of the mega-cap technology stocks, as money appeared to flow out of these crowded names and into beaten-down stocks. Investors, however, gradually returned to the mega-cap space throughout the day, providing a boost for the major indices and leaving AMZN shares down just 0.6%.
Separately, Delta Air Lines (DAL 26.11, -0.71, -2.7%) missed top and bottom-line estimates and issued a cautious revenue outlook for its September quarter. Travelers (TRV 118.55, +4.31, +3.8%) said it expects a net loss in Q2, primarily due to catastrophic events and civil unrest. TRV shares still closed higher.
In the Treasury market, longer-dated tenors saw increased buying interest following the large credit-loss provisions from the banks. The 2-yr yield declined on basis point to 0.15%, and the 10-yr yield declined three basis points to 0.62%. The U.S. Dollar Index declined 0.2% to 96.29. WTI crude increased 0.4%, or $0.16, to $40.24/bbl.
Reviewing Tuesday's economic data:
- The Consumer Price Index (CPI) for June increased 0.6% m/m (consensus 0.5%) following a 0.1% decline in May. Excluding food and energy, CPI rose 0.2% m/m (consensus 0.1%) after a 0.1% decline in May. This was the first increase in core CPI since February.
- The key takeaway from the report is that shows inflation at the consumer level remains in a subdued state, evidenced by a 0.6% yr/yr increase in total CPI and a 1.2% yr/yr increase in core CPI.
- The NFIB Small Business Optimism for June increased to 100.6 from 94.4 in May.
Looking ahead to Wednesday, investors will receive Industrial Production and Capacity Utilization for June, Export and Import Prices for June, the Empire State Manufacturing Index for July, and the weekly MBA Mortgage Applications Index.
- Nasdaq Composite +16.9% YTD
- S&P 500 -1.0% YTD
- Dow Jones Industrial Average -6.6% YTD
- Russell 2000 -14.4% YTD