Daily market review
The market showed a slightly positive trend at the beginning of the day but gained momentum in the afternoon, resulting in the S&P 500 reaching its highest level since April 21, 2022. This increase was driven by investors chasing higher returns and a fear of missing out on potential gains. Market rates declined as the Treasury market successfully absorbed nearly $200 billion worth of bills and notes, with an additional $101 billion scheduled for sale the following day. The 2-year note yield reached a high of 4.63% but settled at 4.59%, while the 10-year note yield peaked at 3.79% before settling at 3.77%.
Leading the rally were mega-cap stocks, which also pulled other stocks along with them. The Vanguard Mega Cap Growth ETF (MGK) rose by 1.5%, and the Invesco S&P 500 Equal Weight ETF (RSP) increased by 0.7%. The market-cap weighted S&P 500 closed with a 0.9% gain.
Most sectors of the S&P 500 experienced gains, with information technology (+2.1%), consumer discretionary (+1.7%), and communication services (+1.2%) being the top performers. These sectors benefited from the strength of their mega-cap constituents. However, the energy sector was the worst performer, declining by 1.0%, due to falling oil prices. Goldman Sachs revised its Brent crude and WTI crude forecasts downwards, citing increased oil supplies.
Despite upcoming market-moving events, buyers remained undeterred. This week will see the release of the May Consumer Price Index, May Retail Sales report, and policy decisions from the FOMC, European Central Bank, and Bank of Japan.
Today's economic data was limited to the May Treasury Budget, which revealed a deficit of $240.3 billion compared to a deficit of $66.2 billion in the same period last year. The deficit in May was a result of outlays exceeding receipts. It's important to note that the May 2023 deficit cannot be directly compared to the April 2023 surplus since the Treasury Budget data is not seasonally adjusted. Notably, the level of outlays in May was the second highest in fiscal 2023.
The 10-year Treasury note experienced a small decline of -2/32, resulting in a yield of 3.77%. In the stock market, there were more advancing stocks than declining stocks, with 1,454 advancing and 1,403 declining on the NYSE, and 2,621 advancing and 1,837 declining on the Nasdaq. The trading volume was 878 million on the NYSE and 4.7 billion on the Nasdaq.
In terms of industry performance, the Consumer Discretionary, Information Technology, Communication Services, and Industrials sectors showed strength, while the Energy and Utilities sectors were weak.
As for market movement factors, investors were in a wait-and-see mode in anticipation of a busy week filled with potentially market-moving events. The S&P 500 maintained a position above 4,300, which was a positive sign. The market advance was relatively broad-based, led by mega-cap stocks. Additionally, the Treasury market successfully absorbed almost $200 billion worth of bills and notes, indicating its ability to handle the influx of supply.