Daily market review
Today's market showed strength after a mixed start, with the major indices closing near their highest levels of the day. The S&P 500 crossed the 4,200 level, while the Dow Jones Industrial Average had a modest gain due to a significant loss in Salesforce following its earnings report. The rally-mode kicked in after the release of the May ISM Manufacturing Index, which indicated a drop in new orders but a positive deceleration in the Prices Paid Index. Market participants also considered positive data such as weekly initial jobless claims and the ADP Employment Change for May, which reflected ongoing strength in the labor market. Encouraging economic data from China's Caixin manufacturing PMI, showing expansion, and the eurozone's moderated CPI contributed to easing global growth concerns. Mega caps and semiconductor stocks performed well, with the Vanguard Mega Cap Growth ETF and the PHLX Semiconductor Index both rising. The information technology sector led the gains, supported by semiconductor-related components, Apple, and Microsoft. Other sectors that performed strongly were industrials, materials, and energy, the latter benefiting from rising oil prices. However, countercyclical sectors like utilities and consumer staples closed with losses. Treasury yields fell across the curve, with the 2-year note yield dropping by six basis points and the 10-year note yield falling by three basis points. In other news, the debt ceiling deal passed in the House and is expected to pass in the Senate soon. Economic data from today included positive job growth in the May ADP Employment Change report, along with slower pay growth. Weekly initial jobless claims remained below recession levels, indicating businesses' reluctance to reduce staff. Q1 productivity was weak, while the May IHS Markit Manufacturing PMI and the ISM Manufacturing Index reflected ongoing contraction in activity, though there were signs of improvement in certain areas. April construction spending showed weakness in new single-family construction but strength in private and public nonresidential spending.
The 10-year note experienced a significant increase of 25/32, resulting in a yield of 3.61%. On the NYSE, advances outnumbered declines with 2,100 advancing stocks and 821 declining stocks, while the trading volume reached 1.0 billion. The Nasdaq had a stronger performance, with 2,950 advancing stocks and 1,471 declining stocks, and a higher trading volume of 4.6 billion.
In terms of industries, energy, materials, industrials, information technology, and consumer discretionary sectors exhibited strength, while utilities and consumer staples sectors showed weakness.
Several factors influenced the market movement, including the analysis and interpretation of today's economic data, particularly the May ISM Manufacturing Index, which indicated a decline in new orders but also a positive deceleration in the Prices Paid Index. Additionally, the market received a boost from the strong performance of mega-cap and semiconductor stocks. Leadership within the market was observed in cyclical areas. Another significant factor impacting the market was the decline in Treasury yields.