Closing Stock Market SummaryThe bulls and bears did battle again today. The final standing of the major indices suggests things ended in a draw. There was little change in the major indices, yet that was actually a victory for the bulls.
It was a victory on several counts:
- It was a victory because the market maintained the bulk of yesterday's gains.
- It was a victory because the Dow, Nasdaq, and S&P 500 battled back from opening declines of 1.2%, 1.3%, and 1.2%, respectively.
- It was a victory because Fed Chair Powell acknowledged in his Semiannual Monetary Policy testimony to the Senate Banking Committee that it is going to be challenging to achieve a soft landing.
- It was a victory because there were clear growth concerns below the index level.
In brief, the stock market had ample reasons to sell aggressively into yesterday's strength but it didn't. That resilience fostered a sense that the existing growth concerns have been adequately priced into the market for now. One can only hope. Entering today, the Dow, Nasdaq, S&P 500, S&P 400, and Russell 2000 were down 12.0%, 22.1%, 16.9%, 16.5%, and 18.2%, respectively, for the quarter.
The scope of those losses has contributed to the thinking that rebalancing activity at quarter end could lead to a needed markup in stock prices. That view helped hold today's line so to speak, as did the quick recovery effort following the opening slide.
That's not to say that today was an entirely convincing move for a market that has been predisposed to selling into strength all year. Rather, it's just to say that today invited a test of sentiment and that the bulls didn't indisputably fail that test.
A fairly steady performance from the mega-cap stocks helped hold the index line, which was also supported by relative strength in the real estate (+1.6%), health care (+1.4%), and utilities (+1.0%) sectors. That helped offset relative weakness in the information technology (-0.4%) sector and the more cyclically-oriented energy (-4.2%), materials (-1.3%), and industrials (-0.5%) sectors.
Energy was a major drag throughout the day, giving in to global growth concerns that knocked WTI crude oil futures down 3.2% to $106.07/bbl. There was no pull from the demand-supportive news that President Biden has called on Congress to suspend the national tax on gas and diesel for three months.
Similarly, copper futures fell 2.1% to $3.95/lb on the growth concerns, which also manifested themselves in the Treasury market. The 2-yr note yield dropped 17 basis points to 3.05% and the 10-yr note yield dropped 15 basis points to 3.16%.
Today's lone economic report was the MBA's weekly Mortgage Applications Index. It jumped 4.2% on an 8% increase in purchase applications that featured strong demand for adjustable rate mortgages.
Looking ahead, market participants will receive the Q1 Current Account Balance (8:30 a.m. ET), weekly initial claims (8:30 a.m. ET), and preliminary June IHS Markit Manufacturing and Services PMIs (9:45 a.m. ET) on Thursday. Additionally, Fed Chair Powell will appear before the House Financial Services Committee at 10:00 a.m. ET for day two of his semiannual monetary policy testimony.
- Dow Jones Industrial Average: -16.2% YTD
- S&P 500: -21.1% YTD
- S&P 400: -21.3% YTD
- Russell 2000: -24.8% YTD
- Nasdaq Composite: -29.4% YTD
After Hours Summary: Quiet after hours; SCS +4.3%, WOR +4%, KBH +3.1% higher on earningsAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: SCS +4.3%, WOR +4%, KBH +3.1%
Companies trading higher in after hours in reaction to news: AURA +7.3% (reports topline data from study of AU-011), CENX +2.6% (to temporarily idle its smelter in KY due to soaring energy costs), ACI +1.1% (five largest shareholders agree to extend lock-up to Sep 10), LDOS +0.3% (DES $11.5 bln contract win upheld by GAO)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: FUL -0.8%
Companies trading lower in after hours in reaction to news: XENE -2.1% (provides update on additional positive data from XEN1101 program; also stock offering), RDUS -2% (submits NDA to FDA for elacestrant for breast cancer), ATKR -1.5% (acquires United Poly Systems), AMD -0.2% (names Mathew Hein as chief strategy officer), COIN -0.2% (phasing out "Coinbase Pro"), ENPH -0.1% (COO to retire)