Closing Market Summary: S&P 500 Slips Below 100-Day Moving Average
The stock market began the new trading week on a cautious note with the S&P 500 sliding below its 100-day moving average (2,089). The benchmark index lost 0.5% and registered its second consecutive decline.
Equities notched their session lows during the opening hour after Sunday's talks between Greek officials and the country's creditors broke down without any progress. This left the situation essentially unchanged since last week with the two sides remaining at odds over cuts to state pensions/wages and the appropriate VAT levels.
The lack of progress between the two sides fueled the opening retreat, but the S&P 500 was able to cut its loss in half by midday. Equities held near their afternoon levels after Germany's Suddeutsche Zeitung reported that Eurozone officials have agreed on a plan B in the event Greece is unable to come to terms with its creditors. According to the report, a special summit will be held on Friday night if this week passes without a deal. Furthermore, it is expected that capital controls will be imposed, but enforcement of those measures would be in the hands of the Greek parliament.
For the second day in a row, the lack of progress led to a widening in European yield spreads with demand for German bunds driving their yield down a basis point to 0.82% while Italy's 10-yr yield jumped 11 basis points to 2.33%. Similarly, Spain's 10-yr yield increased ten basis points to 2.38% as European investors showed safe-haven demand.
That safe-have demand kept Treasuries in the green throughout the day. The 10-yr note settled below its high, but still ended in the green with its yield down four basis points at 2.36%.
Nine of ten sectors registered losses with the top-weighted technology space (-0.6%) struggling throughout the day. The sector was pressured by some of its largest components like Microsoft (MSFT 45.48, -0.49), Oracle (ORCL 43.74, -0.60), and Facebook (FB 80.71, -0.82) while high-beta chipmakers fared relatively well even though the PHLX Semiconductor Index shed 0.2%. Micron (MU 24.24, -0.89) and SanDisk (SNDK 64.18, -1.92) kept the index near the broader market after both names were downgraded at Morgan Stanley. Micron lost 3.5% while SanDisk surrendered 2.9%.
Elsewhere, industrials (-0.8%) and materials (-0.7%) underperformed while the remaining cyclical sectors ended near the broader market. Notably, the consumer discretionary space (-0.5%) settled in-line with the S&P 500, which masked relative strength among homebuilders. The iShares Dow Jones US Home Construction ETF (ITB 26.94, +0.04) added 0.2% after Standard Pacific (SPF 8.82, +0.46) and Ryland Group (RYL 45.02, +2.23) agreed to a merger of equals.
Meanwhile, the countercyclical side looked a little better with the health care sector (+0.03%) eking out a slim gain. Similarly, the utilities sector (-0.2%) finished ahead of the broader market while telecom services (-0.6%) and consumer staples (-0.7%) underperformed.
Today's trading volume was below average with roughly 715 million shares changing hands at the NYSE floor.
Economic data included Empire Manufacturing, Industrial Production/Capacity Utilization, and NAHB Housing Market Index:Tomorrow, May Housing Starts (Briefing.com consensus 1.10 million) and Building Permits (consensus 1.10 million) will both be released at 8:30 ET.
- The Empire Manufacturing Survey for June registered a reading of -2.0, which was below the prior month's reading of 3.1 and below the Briefing.com consensus estimate, which was pegged at 6.0
- Industrial production decreased 0.2% in May after declining a downwardly revised 0.5% (from -0.3%) in April while the Briefing.com consensus expected an increase of 0.3%
- Manufacturing production declined 0.2% in May after increasing 0.1% in April, which was the first decline since a 0.2% drop in February
- Capacity utilization hit 78.1% while the Briefing.com consensus expected a reading of 78.3%
- The NAHB Housing Market Index for June rose to 59 from 54 while the Briefing.com consensus expected an increase to 56
- Nasdaq Composite +6.2% YTD
- Russell 2000 +4.8% YTD
- S&P 500 +1.2% YTD
- Dow Jones Industrial Average -0.2% ytd