Closing Stock Market SummaryThe stock market kicked off this options expiration day on an upbeat note, but rolled over fairly quickly. Opening gains had the S&P 500 back above the 4,200 level before the market turned lower around 11:00 a.m. ET when Fed Chair Powell began speaking at a panel discussion regarding perspectives on monetary policy.
Equities seemed to be responding to worries about the debt ceiling and regional banks, though, rather than Mr. Powell's comments. Briefly, Mr. Powell said that inflation is "far above" the Fed's objective, but also said that rates may not have to rise as much because of credit conditions. These views were comparable to what he shared during his press conference following the FOMC meeting earlier this month, so they weren't necessarily surprising.
What was surprising was a tweet from Punchbowl News reporter Jake Sherman that "debt limit talks between the White House and House Republicans have been paused, per multiple sources involved in the talks." Around the same time, CNN reported that Treasury Secretary Yellen told bank CEOs that more mergers might be needed. The latter news stirred some renewed angst in the banking space.
The SPDR S&P Regional Banking ETF (KRE) closed with a 1.8% loss. Still, regional bank stocks had a good showing this week and today's losses were not enough to offset a sizable gain in the KRE, which rose 7.8% on the week.
Ultimately, the major indices were able to climb somewhat off their lows to close with more modest losses; however, the S&P 500 remained pinned below 4,200 on a closing basis.
Most of the S&P 500 sectors closed with losses while energy (+0.7%) and health care (+0.5%) outperformed.
Despite a nice gain in Tesla (TSLA 180.14, +3.25, +1.8%), the S&P 500 consumer discretionary sector (-0.8%) closed at the bottom of the pack. A loss in Amazon.com (AMZN 116.25, -1.90, -1.6%) contributed to the sector's underperformance, but lagging retailers suffered the steepest declines. The SPDR S&P Retailer ETF (XRT) fell 3.6% today. Although it's not a sector component, retailers were trading down in sympathy with Foot Locker (FL 30.21, -11.31, -27.2%), which reported disappointing earnings results and issued dismal guidance.
The communication services (-0.5%) and financials (-0.5%) sectors were also top laggards today.
Treasuries saw some knee-jerk buying in response to the debt ceiling and regional bank worries coming back into play. The 2-yr note yield, at 4.35% before the news broke, plunged to 4.19% before settling the day unchanged at 4.27%. The 10-yr note yield, at 3.71% earlier, fell to 3.64% but settled up four basis points to 3.69%.
- Nasdaq Composite: +20.9% YTD
- S&P 500: +9.2% YTD
- S&P Midcap 400: +1.1% YTD
- Dow Jones Industrial Average: +0.8% YTD
- Russell 2000: +0.7% YTD
There was no notable U.S. economic data today.
There will be no notable U.S. economic data on Monday.