Closing Stock Market Summary
It was another strong day for stocks on light volume. A big drop in market rates provided the positive catalyst for stocks. The S&P 500 climbed its 50-day moving average (4,460) shortly after the open and ultimately settled just a whisker shy of the 4,500 level. All the major indices settled near their highs of the day.
Treasury yields dropped sharply following the release of the July JOLTS - Job Openings Report and August Consumer Confidence Index at 10:00 a.m. ET. Both of those reports were weaker than expected, which is a good thing in the market's eyes as it relates to Fed policy.
Job openings slumped to 8.827 million in July from a downwardly revised 9.165 million (from 9.824 million) in June. The Consumer Confidence Index, meanwhile, dropped to 106.1 in August (consensus 116.0) from a downwardly revised 114.0 (from 117.0) in July as receding optimism about employment conditions negatively affected consumers' view of the present situation and outlook.
The 2-yr note yield, at 5.03% just before the data, fell 15 basis points from yesterday's settlement to 4.91%. The 10-yr note yield, at 4.21% just before the data, fell nine basis points to 4.12%.
The drop in market rates coincided with a drop in rate hike expectations. The probability of another rate increase at the November FOMC meeting fell to 45.6% from 62.3% yesterday, according to the CME FedWatch Tool.
Mega caps and other growth stocks led the upside charge, reacting positively to the drop in market rates. The Vanguard Mega Cap Growth ETF (MGK) jumped 2.0% and the Russell 3000 Growth Index rose 1.9%.
All 11 S&P 500 sectors closed with a gain. The communication services (+2.5%), consumer discretionary (+2.4%), and information technology (+2.1%) sectors were propelled to first place on the leaderboard by their strong mega cap components.
A gain in Best Buy (BBY 76.93, +2.86, +3.9%) following its earnings results and outlook provided an additional boost to the consumer discretionary sector.
The utilities (+0.3%) and energy (+0.3%) sectors saw the slimmest gains.
In other news, Crypto-related stocks were a pocket of strength after a Federal appeals court ruled against the SEC in the Grayscale spot bitcoin ETF case, saying the SEC incorrectly rejected Grayscale's spot bitcoin ETF filing. Coinbase (COIN 84.70, +10.99, +14.9%) was a top winner from the space.
- Nasdaq Composite: +33.2% YTD
- S&P 500: +17.1% YTD
- Russell 2000: +8.6% YTD
- S&P Midcap 400: +7.6% YTD
- Dow Jones Industrial Average: +5.1% YTD
Reviewing today's economic data:
- June FHFA Housing Price Index 0.3%; prior 0.7%
- June S&P Case-Shiller Home Price Index, Yr/Yr -1.2% vs consensus of 0.9%; Prior -1.7%
- August Consumer Confidence 106.1 vs Briefing.com consensus of 116.0; Prior was revised to 114.0 from 117.0
- The key takeaway from the report is that receding optimism about employment conditions negatively affected consumers' view of the present situation and outlook.
- July JOLTS - Job Openings 8.827 mln vs consensus of ; Prior was revised to 9.165 mln from 9.842 mln
Wednesday's economic calendar will feature:
- 7:00 ET: Weekly MBA Mortgage Index (prior -4.2%)
- 8:15 ET: August ADP Employment Change (consensus 195,000; prior 324,000)
- 8:30 ET: Q2 GDP -- second estimate (consensus 2.4%; prior 2.4%), Q2 GDP Deflator -- second estimate (consensus 2.2%; prior 2.2%), July advance goods trade balance (prior -$87.8 bln), advance Retail Inventories (prior 0.3%), and advance Wholesale Inventories (prior -0.5%)
- 10:00 ET: July Pending Home Sales ( consensus -1.3%; prior 0.3%)
- 10:30 ET: Weekly crude oil inventories (prior -6.14 mln)