Closing Stock Market SummaryThe S&P 500 rallied as much as 2.2% on Tuesday on a familiar reopening trade, but some weakness into the close left the benchmark index up 1.2% for the session. The Dow Jones Industrial Average (+2.2%), Russell 2000 (+2.8%), and S&P MidCap 400 (+3.4%) outperformed, while the Nasdaq Composite increased just 0.2%.
Some attributed today's late selling to a Bloomberg report that indicated the Trump administration was considering sanctions on Chinese officials, businesses, and financial institutions in response to Beijing's plans to tighten control over Hong Kong. The news wasn't exactly "new," but the negative-sounding headline helped take the S&P 500 below its 200-day moving average (3000) on a closing basis.
Nevertheless, stocks remained supported by a multitude of factors, namely favorable monetary and fiscal policy; reopening efforts; vaccine progress; and a bullish trend that has pulled in reluctant investors fearful of missing out on further gains. Over the extended weekend, many more businesses continued to reopen as the rate of new coronavirus cases and deaths continued to flatten or decline.
The reopening trade was still manifested in the leadership from the financials (+5.0%) and industrials (+4.2%) sectors, and in the higher oil prices ($34.36/bbl, +$1.11, +3.3%). The heavily-weighted information technology (-0.1%) and health care (-0.2%) sectors, however, slipped into negative territory.
Deemed as an early catalyst today, Merck (MRK 77.26, +0.89, +1.2%) and Novavax (NVAX 48.17, +2.06, +4.5%) joined the race for a COVID-19 vaccine. Separately, JPMorgan Chase (JPM 95.82, +6.35, +7.1%) CEO Jamie Dimon expressed confidence in his company as well as hope in an economic recovery.
Elsewhere, airline stocks were among today's biggest gainers, evident by the 11.8% gain in the U.S. Global Jets ETF (JETS 15.31, +1.61, +11.8%).
The U.S. Treasury curve continued to experience curve-steepening activity amid the market's upbeat economic outlook. The 2-yr yield was unchanged at 0.17%, while the 10-yr yield increased four basis points to 0.70%. The U.S. Dollar Index declined 0.9% to 98.97.
Reviewing Tuesday's economic data, which was mostly better-than expected:
- New home sales increased 0.6% m/m to a seasonally adjusted annual rate of 623,000 (consensus 485,000) from a downwardly revised 619,000 (from 627,000). On a yr/yr basis, new home sales were down 6.2%.
- The key takeaway from the report is that the strength in sales was fortified by lower selling prices.
- The Conference Board's Consumer Confidence Index checked in at 86.6 for May (consensus 88.5) versus a downwardly revised 85.7 (from 86.9) for April.
- The key takeaway from the report is that attitudes about the short-term outlook increased some, reflecting some budding optimism about reopening efforts.
- The FHFA Housing Price Index for May increased 0.1% following an upwardly revised 0.8% in April (from +0.7%).
- The S&P Case-Shiller Home Price Index increased 3.9% yr/yr in March (consensus 3.8%) following a 3.5% increase in February.
Looking ahead, investors will receive the Fed's Beige Book and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +4.1% YTD
- S&P 500 -7.4% YTD
- Dow Jones Industrial Average -12.4% YTD
- Russell 2000 -16.5% YTD