Daily market review
Despite some mixed performance at the index level, today's trade generally had an optimistic tone, with higher-than-average trading volume. The Russell 2000 stood out as a winner once again, posting a gain of 1.8%. However, several mega-cap stocks experienced notable declines, including Amazon.com, Alphabet, Microsoft, and NVIDIA, which faced profit-taking after significant gains and valuation concerns. Apple also logged a loss for the session. The Vanguard Mega Cap Growth ETF fell 1.7%. Despite these declines, the broader market displayed relative strength, as seen in the Invesco S&P 500 Equal Weight ETF, which rose 0.7%. Money flowed away from mega-cap stocks and into other areas, particularly economically-sensitive sectors. The market-cap weighted S&P 500 faced resistance after hitting 4,299 earlier in the day and ended with a modest 0.4% decline. The Russell 2000 benefited from its energy and regional bank components, with the SPDR S&P Regional Banking ETF rising 3.3%. The energy sector led the way with a 2.7% gain, followed by materials and industrials with increases of 1.2% and 1.6%, respectively. Lagging behind were the communication services, information technology, and consumer discretionary sectors, weighed down by underperforming mega-cap stocks. Rising market rates also impacted mega-caps and growth stocks. Treasury yields saw some selling pressure following the Bank of Canada's surprise rate hike, but losses were trimmed later in the day. In terms of economic data, the weekly MBA Mortgage Applications Index declined 1.4%, the U.S. trade deficit widened in April, with weaker demand for U.S. goods contributing to a drop in exports, the weekly EIA Crude Oil Inventories showed a draw, and consumer credit increased in April, with revolving credit driving the expansion.
The 10-year Treasury Note experienced a decline of 30/32, resulting in a yield of 3.78%. In the NYSE, there were 1,817 advancing stocks and 1,018 declining stocks, with a total trading volume of 1.0 billion. On the Nasdaq, there were 2,393 advancing stocks and 2,024 declining stocks, with a higher trading volume of 5.2 billion.
In terms of industry performance, the energy, utilities, real estate, materials, and industrials sectors demonstrated strength. On the other hand, the communication services, information technology, consumer discretionary, health care, and consumer staples sectors showed weakness.
Several factors influenced the market movement, including a broad advance driven by small-cap stocks, relative strength in regional bank stocks, a pro-cyclical sentiment, rising Treasury yields, and weakness in mega-cap stocks. These dynamics shaped the overall market activity.