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Closing Stock Market Summary

The S&P 500 gained 0.8% on Monday to overcome an early 2.5% decline, as the market brushed aside coronavirus concerns and welcomed another aggressive policy update from the Fed. The Dow Jones Industrial Average swung nearly 1000 points from its bottom to close 0.6% higher. The Nasdaq Composite (+1.4%) and Russell 2000 (+2.3%) outperformed.

The early weakness was attributed to reports about increasing rates of coronavirus cases and hospitalizations in several U.S. states and even an outbreak at a food market in Beijing. Underwhelming industrial production and retail sales data for May out of China also weighed on recovery sentiment. 

All 11 S&P 500 sectors traded sharply lower, but buyers gradually returned to buy the dip, which contributed to a steady rebound off early lows. Then, at 2:00 p.m. ET, the rebounding market received a noticeable pop into positive territory after the Fed announced it will start buying individual corporate bonds through its Secondary Market Corporate Credit Facility. 

The move was unexpected, but it reminded the market that the Fed can, and will, expand its policy tools to support the market at any time during this recovery. All 11 S&P 500 sectors ended the session in positive territory.

The financials sector (+1.4%) outperformed, even as banks noted a steady pace of net credit losses in May, followed by the consumer staples sector (+1.1%). The health care (+0.2%) and energy (+0.1%) sectors eked out small gains.  

Stay-at-home stocks continued to outperform the broader market amid reported threats of a second wave of coronavirus infections. Shopify (SHOP 805.47, +62.89, +8.5%) was a notable standout after announcing a new partnership with Walmart (WMT 118.08, +0.34, +0.3%). 

U.S. Treasuries exhibited an early flight-to-safety trade, which then unraveled with the rebound in equities. The 2-yr yield and the 10-yr yield ended the session unchanged at 0.18% and 0.70%, respectively. The U.S. Dollar Index declined 0.6% to 96.71. WTI crude futures rose 1.9%, or $0.68, to $36.94/bbl.

Monday's economic data was limited to the Empire State Manufacturing Survey for June, which improved to -0.2 (consensus -25.0) from -48.5 in May.

Looking ahead to Tuesday, investors will receive Retail Sales for May, Capacity Utilization and Industrial Production for May, Business Inventories for May, and the NAHB Housing Market Index for June. In addition, Fed Chair Powell will provide his semiannual monetary policy testimony.

• Nasdaq Composite +8.4% YTD
• S&P 500 -5.1% YTD
• Dow Jones Industrial Average -9.7% YTD
• Russell 2000 -14.9% YTD

After Hours Summary: WW +9.7% up sharply on positive sub data; LEN -1.2% down on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to news: LMPX +18.3% (names new CFO), INFN +12%, WW +9.7% (provides update; Subs as of June 6 totaled 4.9 mln, up 7% yr/yr), NYMT +9.3% (resumes dividend), PLYA +4.9% (S&P downgrade), SWBI +4.7% (extends momentum), IDEX +4.5% (to sell its Grapevine and related influencer platform), UNVR +4.3% (reaches new distribution agreement with Biosynthetic Tech), FHN +1.9% (receive regulatory approval for proposed merger), KN +1.5% (announces workforce reduction), ZM +1% (announces that the Zoom Phone added to Zoom for Govt), AAPL +0.2% (says its App Store supported $519 bln in billings and sales globally in 2019)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: LEN -1.2%

Companies trading lower in after hours in reaction to news: CNST -4.6% (commences public offering of 4 mln shares), AAXN -3.6% (commences 3 mln share offering), CLDX -3.4% (stock offering), IRT -2.4% (lowers dividend; also files mixed securities shelf offering), VICI -1.9% (stock offering; also to acquire 23 acres of undeveloped land), TMUS -0.8% (SFTBY files 13D; says exploring transactions for shares), ERI -0.5% (stock offering; also to enter into a $400 mln mortgage), NKLA -0.3% (stock offering)