Daily market review
The market displayed a decent performance today, with the Russell 2000 leading the gains in index levels, while large-cap stocks weighed down the S&P 500, Dow Jones Industrial Average, and Nasdaq. Although the three major indices started in negative territory around midday, they rebounded and closed near their highest levels.
Apple experienced a slight loss but recovered from earlier declines after being downgraded by D.A. Davidson. However, the losses in mega-cap stocks limited the overall index performance. Microsoft, NVIDIA, and Meta Platforms all closed in the red.
On the other hand, the Vanguard Mega Cap Growth ETF saw a 0.1% increase, thanks to support from Alphabet, Tesla, and Amazon.com. The strength in the broader market was evident in the 0.7% gain of the Invesco S&P 500 Equal Weight ETF, while the market-cap weighted S&P 500 rose by 0.2%.
The Russell 2000 recorded a robust 2.7% gain, propelled by the strength in regional bank shares and energy stocks. The SPDR S&P Regional Banking ETF and the SPDR S&P Bank ETF both saw significant increases. This was partly influenced by Goldman Sachs lowering the probability of a recession in the next 12 months, citing reduced banking risks.
The top-performing sectors of the day were financials, consumer discretionary, energy, materials, and industrials, all showing gains. Conversely, the health care and consumer staples sectors performed poorly, while the information technology sector also underperformed, mainly due to Apple and Microsoft. However, most of the semiconductor components within the technology sector exhibited relative strength.
Coinbase Global shares experienced a significant decline after news broke that the SEC is charging Coinbase for operating as an unregistered securities exchange, broker, and clearing agency.
In the bond market, the 2-year Treasury note yield rose by four basis points to 4.52%, while the 10-year note yield remained unchanged at 3.69%.
No notable U.S. economic data was released today. The NYSE had more advancing stocks than declining ones, with a volume of 857 million, while the Nasdaq had a higher volume of 4.8 billion, but with more declining stocks.
In terms of industry watch, the financials, materials, and communication services sectors showed strength, while the health care, consumer staples, and information technology sectors performed weakly.
Several factors were influencing the market, including a growing sense that mega-cap stocks were overbought in the short term and due for a pullback, rising Treasury yields, a wait-and-see attitude ahead of the release of the May Consumer Price Index and the FOMC decision next week, and the strength exhibited by regional bank stocks.