Market Snapshot
briefing.com
| Dow | 31392.79 | -880.00 | (-2.73%) | | Nasdaq | 11340.02 | -414.20 | (-3.52%) | | SP 500 | 3900.86 | -116.96 | (-2.91%) | | 10-yr Note | -1 3/32 | 3.156 |
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| | NYSE | Adv 463 | Dec 2586 | Vol 1.07 bln | | Nasdaq | Adv 955 | Dec 3096 | Vol 5.08 bln |
Industry Watch
| Strong: Consumer Staples |
| | Weak: Information Technology, Materials, Consumer Discretionary, Financials, Consumer Discretionary |
Moving the Market
-- Hotter-than-expected CPI data raising concerns about rate hikes and the Fed's future policy course
-- Broad-based losses
-- Treasury note yields moving up
-- Worse-than-expected number from the University of Michigan Consumer Sentiment prelim. reading
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Hot inflation fuels Friday slide
10-Jun-22 16:15 ET
Dow -880.00 at 31392.79, Nasdaq -414.20 at 11340.02, S&P -116.96 at 3900.86
[BRIEFING.COM] The stock market ended the week on a disappointing note, pressured by hot inflation and weakening consumer sentiment. The S&P 500 fell 2.9%, surrendering 5.1% for the week while the Nasdaq (-3.5%) underperformed, losing 5.6% this week.
Equities recorded nearly half of their losses at the open, responding to the May CPI report, which did not show the desired relief in price pressures. Instead, the yr/yr CPI rate accelerated past its March high to a level not seen since early 1982 while the yr/yr core reading receded to 6.0% from 6.2% in April and 6.5% in March.
The small dip in the yr/yr core rate was not enough to improve sentiment, especially since the preliminary reading of the June consumer sentiment survey from the University of Michigan plunged to a record low of 50.2, due in large part to persistently hot inflation.
Shorter-dated Treasuries faced immediate pressure in reaction to the inflation report while longer tenors joined the retreat after putting up some early resistance. The 2-yr yield jumped 22 bps to 3.04% while the 10-yr yield rose 11 bps to 3.16%, marking a fresh high for the year in the process.
All eleven sectors finished the day in negative territory with top-weighted groups like consumer discretionary (-4.2%), technology (-3.9%), and financials (-3.7%) showing the widest losses throughout the day. Countercyclical consumer staples (-0.4%) and utilities (-0.8%) outperformed, making a brief appearance in positive territory, but could not hold their gains into the close.
Concerns about the strength of future consumption kept the discretionary sector at the bottom of the leaderboard with retailers and travel-related names showing the biggest losses. Amazon (AMZN 109.65, -6.50, -5.6%) fell for the fourth consecutive day toward its May low (101.26) while Booking Holdings (BKNG 2104.96, -172.88, -7.6%) fell past its 50-day moving average (2201.85) to its lowest level in nearly two weeks. Discount retailers Dollar Tree (DLTR 156.00, -3.85, -2.4%) and Dollar General (DG 233.36, -4.35, -1.8%) finished ahead of the sector.
Financials continued this week's underperformance with credit providers like Discover Financial (DFS 98.14, -7.99, -7.5%) and Synchrony Financial (SYF 31.51, -2.34, -6.9%) ending at the bottom of the barrel. The sector lost 6.8% this week, finishing behind the remaining ten groups.
The top-weighted technology sector could not escape today's selling pressure, but the high-beta PHLX Semiconductor Index (-3.6%) ended a bit ahead of the broader sector even though NVIDIA (NVDA 169.74, -10.74, -6.0%) lost 6.0%. Despite today's slight outperformance, the PHLX Semiconductor Index lost 7.5% for the week while the tech sector gave up 6.4% since last Friday.
Late trade saw brief gains in countercyclical consumer staples and utilities, but both sectors returned into the red ahead of the close. Hershey (HSY 213.35, +3.90, +1.9%) was the top performer among staple stocks while nearly half of the remaining components also ended in the green.
Today's session saw above-average volume with more than a billion shares changing hands at the NYSE floor and more than five billion traded on the NASDAQ.
Reviewing today's data:
- Total CPI increased 1.0% month-over-month in May (Briefing.com consensus 0.7%) following a 0.3% increase in April. Core CPI, which excludes food and energy, increased 0.6% month-over-month in May (Briefing.com consensus 0.5%) following a 0.6% increase in April. On a year-over-year basis, total CPI was up 8.6%, versus 8.3% in April, and core CPI was up 6.0%, versus 6.2% in April.
- The key takeaway from the report isn't singular. There are multiple takeaways: (1) the price increases were broad-based, including price jumps for used cars and trucks and new vehicles, which many thought would be softening (2) the shelter index, which accounts for about one third of CPI, was up 0.6% month-over-month (3) the food index saw its largest 12-month increase (10.1%) since March 1981 (4) rising energy costs continue to challenge the peak inflation narrative and (5) the Fed is likely to stay on an aggressive rate-hike path.
- The preliminary University of Michigan Index of Consumer Sentiment for June dropped to 50.2 (Briefing.com consensus 59.0) from the final reading of 58.4 for May. The June reading compares to 85.5 in the same period a year ago and is the lowest reading ever on records dating back to 1978.
- The key takeaway from the report is the understanding that inflation pressures, which are painfully apparent in rising gas prices, are seriously undermining consumer sentiment.
- The Treasury Budget showed a $66.2 bln deficit in May versus a $132.0 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the May deficit cannot be compared to the April surplus of $308.2 bln.
- The budget deficit over the last 12 months is $1.14 trln versus a deficit of $1.20 trln in April.
There is no data on Monday's schedule.
- Dow Jones Industrial Average -13.6% YTD
- S&P 400 -15.4% YTD
- S&P 500 -18.2% YTD
- Russell 2000 -19.8% YTD
- Nasdaq Composite -27.5% YTD
Energy settlement update
10-Jun-22 15:35 ET
Dow -611.36 at 31661.43, Nasdaq -311.54 at 11442.68, S&P -81.89 at 3935.93
[BRIEFING.COM] Heading into the close, the major indices are all on a slow incline, just off their session lows. The Dow, down as much as 850 points at its low, has narrowed its loss to about 600 points.
The S&P 500 energy sector (-1.1%) has traded in the red most of the day but has outperformed the broader market. Week-to-date the sector is almost flat, down just 0.2%. WTI crude oil futures settled down 0.5% to $120.74/bbl and natural gas futures settled down 1.6% to $8.83/mmbtu.
There will be no economic data or earnings on Monday morning but Oracle (ORCL 67.88, -1.32, -1.9%) will report its results after Monday's close.
Defensive sectors outperform
10-Jun-22 15:00 ET
Dow -648.65 at 31624.14, Nasdaq -333.83 at 11420.39, S&P -86.01 at 3931.81
[BRIEFING.COM] The major indices have been seeing mixed action lately and remain elevated off their session lows.
The S&P 500 consumer staples sector (+0.2%) has been flirting with positive territory in recent trading. The defensive-oriented sector has the majority of its components trading up. Two other sectors that are outperforming, though in the red, are fellow defensive-oriented sectors, utilities (-0.6%) and health care (-1.0%).
Increased interest in the defensive-oriented sectors today, combined with a rise in interest of safe-haven assets, plays into the narrative that inflation and rate hikes are driving market participants. Gold settled the cash session today up 1.2% to $1,875.30/oz.
Additionally, Treasury note yields continue their ascent. The 10-yr note yield is up 12 basis points to 3.16% and the 2-yr note yield is up 23 basis points to 3.05%.
Treasury deficit continues to narrow in May on lower pandemic-related spending
10-Jun-22 14:30 ET
Dow -676.31 at 31596.48, Nasdaq -348.49 at 11405.73, S&P -93.01 at 3924.81
[BRIEFING.COM] The major averages didn't respond with much conviction either way following the release of the May Treasury Budget. In short, receipts were down this month -- on a year/year basis -- owing in part to the normalization of the tax filing deadline, which at this time last year was adjusted to May owing to the ongoing pandemic. Overall, the YTD deficit continued to shrink as pandemic-related spending programs continue to decline.
The Treasury Budget for May showed a deficit of $66.2 bln versus a deficit of $132.0 bln a year ago. The Treasury Budget data is not seasonally adjusted, so the May deficit cannot be compared to the surplus of $308.2 bln for April.
Total receipts of $389.0 bln fell 16.1% compared to last year while total outlays of $455.2 bln were down about 23.6% compared to last year.
The total year-end budget deficit now stands at $426.2 bln, down around -79.4% y/y, vs $2.06 trln last year.
Gold finishes higher on Friday, week, as equities flounder
10-Jun-22 13:55 ET
Dow -714.26 at 31558.53, Nasdaq -375.13 at 11379.09, S&P -99.67 at 3918.15
[BRIEFING.COM] With about two hours remaining on Friday the tech-heavy Nasdaq Composite (-3.19%) is still down more than 3%, though has slightly pared losses in recent trading.
Gold futures settled $22.70 higher (+1.2%) to $1,875.50/oz, finishing with a weekly advance of around +1.4%, as equity volatility and inflation data fueled investors' concerns.
Meanwhile, the U.S. Dollar Index is up about +0.9% to $104.13.
As a reminder, the Treasury Budget for May will be released in about 5 minutes at the top of the hour.
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