Market Snapshot
briefing.com
| Dow | 33250.28 | +435.05 | (1.33%) | | Nasdaq | 12316.89 | +322.44 | (2.69%) | | SP 500 | 4176.82 | +75.59 | (1.84%) | | 10-yr Note |
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| | NYSE | Adv 2469 | Dec 813 | Vol 908 mln | | Nasdaq | Adv 3500 | Dec 1167 | Vol 4.3 bln |
Industry Watch
| Strong: Materials, Industrials, Consumer Discretionary, Communication Services, Information Technology |
| | Weak: Energy |
Moving the Market
-- Microsoft lowered Q4 guidance, citing currency changes as the reasoning, but stock ends higher
-- Oil prices move up following underwhelming move by OPEC+ to raise output
-- Fed Governor Brainard says it is very hard to see case for a pause in September
-- Leadership from mega-cap stocks
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Closing Summary
02-Jun-22 16:20 ET
Dow +435.05 at 33250.28, Nasdaq +322.44 at 12316.89, S&P +75.59 at 4176.82
[BRIEFING.COM] Things might have started on a bit of a nervous note for the stock market today, but they certainly ended with a measurable sense of self assurance. The major indices all closed at their best levels for the session, gaining between 1.3% and 2.7%. In turn, the CBOE Volatility Index dropped 4.2% to 24.62 and saw its first move below 25.00 since May 4.
Today's session was dictated largely by the response to a fiscal Q4 earnings warning from Dow component Microsoft (MSFT 274.58, +2.16, +0.8%) before the open. The company shared in an 8K filing that it now expects fiscal Q4 EPS to range from $2.24-2.32 versus its prior guidance of $2.28-2.35. The downward revision was blamed on unfavorable foreign exchange rate movement.
The headline was jarring. It knocked back the futures market and, of course, Microsoft. The latter was down as much as 4.0% at its worst level today, but like the broader market, it found its footing and got running again. Microsoft recouped its early loss and then some, closing at its best levels of the day.
The comeback effort was aided by the understanding that Microsoft's earnings guidance revision wasn't an operational issue. Additionally, there was a renewed appetite for mega-cap stocks today, which eventually flowed through to Microsoft. The Vanguard Mega-Cap Growth ETF, led by Tesla (TSLA 775.00, +34.63, +4.7%) and Meta Platforms (FB 198.86, +10.22, +5.4%), jumped 3.0%. On a related note, Sheryl Sandberg, COO of Meta Platforms, announced her resignation.
The stock market's early resilience to selling efforts, in spite of Microsoft's warning, helped embolden a rebound-minded spirit in the stock market, which traded lower in the previous two sessions this week. Similarly, a jump in oil prices didn't scare buyers away either.
WTI crude futures traded below $112.00/bbl in early action following an FT report that suggested Saudi Arabia is ready to increase its production if there is a significant cut in Russian output because of the EU's sanctions. Crude futures quickly rebounded, though, on the news that OPEC+ is planning to allow for a production increase of 0.648 mb/d in July and August versus a previous plan that would raise output by 0.432 mb/d.
The agreed-upon increase was considered by traders to be underwhelming relative to the demand outlook; hence, prices reversed course, helped also by a report from the EIA that crude stockpiles saw a draw of 5.07 million barrels last week. WTI crude futures settled their session up 1.3% at $116.80/bbl.
Strikingly, the energy sector (-0.3%) never gathered any real rebound momentum and was the only S&P 500 sector to close the day in negative territory. Gains for the remaining sectors ranged from 0.6% (utilities) to 3.0% (consumer discretionary).
The Treasury market had an uneventful session following a mixed batch of data and an acknowledgment by Fed Governor Brainard (FOMC voter) that it is very hard right now for her to see a case to pause the rate hikes in September. The 10-yr note yield slipped two basis points to 2.91% while the 2-yr note yield also fell two basis points to 2.63%.
It is reasonable to think that conviction was lacking in the Treasury market ahead of Friday's release of the May Employment Situation Report (8:30 a.m. ET) and the May ISM Non-Manufacturing Index (10:00 a.m. ET), both of which hold market-moving cachet based on their ability to influence the market's thinking about the future course of the economy and monetary policy.
Reviewing today's economic data:
- Q1 Productivity was revised to -7.3% (Briefing.com consensus -7.5%) from the preliminary reading of -7.5%. Unit labor costs were revised to +12.6% (Briefing.com consensus +11.6%) from the preliminary reading of +11.6%.
- The key takeaway from the report is that Q1 marked the largest decline in productivity since the third quarter of 1947. Another important takeaway is that the 8.2% increase in unit labor costs over the last four quarters was the largest since the third quarter of 1982.
- Initial jobless claims for the week ending May 28 decreased by 11,000 to 200,000 (Briefing.com consensus 210,000). Continuing jobless claims for the week ending May 21 decreased by 34,000 to 1.309 million, which is the lowest level since December 27, 1969.
- The key takeaway from the report is the understanding that the low level of initial and continuing claims is consistent still with a very tight labor market, which in turn is consistent with worries that wage-based inflation pressures could persist and prevent aggregate inflation from falling as quickly as many would like to see.
- Factory orders for manufactured goods increased 0.3% m/m in April (Briefing.com consensus +0.7%) following a 1.8% increase in March. Shipments of manufactured goods rose 0.2% after increasing 2.2% in March.
- The key takeaway from the report is the moderation in new order activity, which followed a strong month in March and coincided with the shutdowns in Shanghai.
- ADP estimated that 128,000 jobs were added to private-sector payrolls in May (Briefing.com consensus 295,000) following a downwardly revised 202,000 (from 247,000) in April.
- The key takeaway from the report was the 91,000 decline seen in small businesses, versus a 97,000 increase for medium businesses and 122,000 increase for large businesses, which suggests small businesses might be struggling to keep up with wage demands that larger, and better-capitalized, companies can offer employees.
- Dow Jones Industrial Average -8.4% YTD
- S&P 400 -10.4% YTD
- S&P 500 -12.4% YTD
- Russell 2000 -15.5% YTD
- Nasdaq Composite -21.3% YTD
Indices holding their highs
02-Jun-22 15:30 ET
Dow +258.86 at 33074.09, Nasdaq +251.17 at 12245.62, S&P +53.16 at 4154.39
[BRIEFING.COM] Heading into the close, the major indices are holding near their highs of the day. The Nasdaq Composite is leading the pack, up 2.3%.
The utilities sector has turned positive in the last half hour, now up 0.3%. The leaves the energy sector (-0.7%) as the only sector in negative territory. Gains for the remaining sectors range from 0.3% to 2.6%.
Looking ahead, market participants will receive the May Employment Situation report at 8:30 a.m. ET followed by the ISM Non-Manufacturing Index at 10:00 a.m. ET.
Energy near session low
02-Jun-22 15:00 ET
Dow +297.12 at 33112.35, Nasdaq +259.11 at 12253.56, S&P +51.62 at 4152.85
[BRIEFING.COM] The major indices have reached new intraday highs in the last half hour.
Going against the grain, the energy sector (-0.8%) is near its session low after showing strength in the early going. WTI crude oil futures are up 1.5% to $116.75/bbl.
The two biggest constituents in the energy sector, Chevron (CVX 174.25, -2.01, -1.1%) and Exxon (XOM 96.90, -0.94, -0.9%), are on a downward trend and nearing their session lows as well.
Separately, Microsoft (MSFT 272.53, +0.09, +0.03%) has recouped the entirety of an earlier 4% decline and has moved into positive territory. That move has added to the strength in the Vanguard Mega Cap Growth ETF (MGK), which is up 2.7%, and the S&P 500 information technology sector (+2.0%).
Hewlett Packard Enterprise underperforms in S&P 500 following earnings miss
02-Jun-22 14:30 ET
Dow +249.86 at 33065.09, Nasdaq +284.69 at 12279.14, S&P +55.00 at 4156.23
[BRIEFING.COM] The S&P 500 (+1.34%) is firmly in second place to this point on Thursday, hovering within a whisper of session highs.
S&P 500 constituents Generac (GNRC 266.14, +22.28, +9.14%), Etsy (ETSY 87.18, +6.24, +7.71%), and Advanced Micro (AMD 108.63, +7.41, +7.32%) pepper the top of today's trading. After favorable commentary from UBS, shares of GNRC lead all components in the S&P, ETSY benefits from today's broader strength in internet and tech names, while AMD leads the PHLX Semiconductor Index (SOX 3,144.87, +95.84, +3.14%).
Meanwhile, Texas-based enterprise computing firm Hewlett Packard Enterprise (HPE 14.85, -0.93, -5.89%) is today's worst-performing component after last night's Q2 report missed expectations.
Gold jumps as dollar slips on Thursday
02-Jun-22 14:00 ET
Dow +196.60 at 33011.83, Nasdaq +258.89 at 12253.34, S&P +48.79 at 4150.02
[BRIEFING.COM] With about two hours remaining on Thursday the tech-heavy Nasdaq Composite (+2.16%) holds a firm lead atop the major averages.
Gold futures settled $22.70 higher (+1.2%) to $1,871.40/oz, aided in part by a decent decline in the greenback.
Meanwhile, the U.S. Dollar Index is down about -0.7% to $101.75.
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