Markets: News  

The stock market showed resilience to selling today despite relatively bad news this morning. Each of the major indices stuck to a fairly narrow range before buyers stepped in late in the session leaving the S&P 500 above the 3,800 level. The S&P 500 closed down 2.2% week-to-date; the Nasdaq closed down 4.1% week-to-date; the Dow Jones Industrial Average closed down 1.3% week-to-date.The market closed decidedly higher before this holiday lengthened weekend despite the following factors:Micron (MU 53.65, -1.63, -3.0%) issued fiscal Q4 revenue and EPS guidance well below consensus estimates, citing a weakened demand environment from smartphones and PCs.General Motors (GM 32.19, +0.43, +1.4%) reduced its Q2 net income expectations -- but left its full-year guidance unchanged -- citing supply chain disruptions that adversely impacted wholesale volumes in Q2.The eurozone had a record-high inflation rate (8.6% yr/yr) in June.The June ISM Manufacturing PMI saw its lowest reading since June 2020 (53.0%) and the first contraction in new orders activity in 25 months.Buyers stepped up to the plate before the close. Early on, there was not much conviction on either side of the tape with decliners roughly in-line with advancers at both the NYSE and the Nasdaq. At the close, advancers led decliners by a greater than 3-to-1 margin at the NYSE and an 3-to-2 margin at the Nasdaq. The rebound accelerated in the early afternoon, shortly after the Atlanta Fed released its updated GDPNow forecast for Q2 GDP, which called for a 2.1% contraction, down from the previous forecast for a 1.0% decrease. While the forecast is now calling for a sharper contraction, it will also fuel speculation about the Fed halting its rate hike cycle sooner than previously thought.This effort left all 11 S&P 500 sectors in the green to end the week. The leaders were utilities (+2.5%), consumer discretionary (+2.0%), real estate (+1.9%), and energy (+1.4%). At the bottom of the pack was information technology (+0.3%), materials (+0.7%), communication services (+0.7%), and industrials (+0.9%).The late session buying mentality could not save semiconductor stocks after Micron's warning. The PHLX Semiconductor was a notable area of weakness today, closing down 3.8%, widening this week's loss to 9.6%. Many of the index components set new 52-week lows, including Micron. Other stocks that reached new lows include NVIDIA (NVDA 145.23, -6.36, -4.2%), Intel (INTC 36.34, -1.07, -2.9%), and Advanced Micro Devices (AMD 73.67, -2.80, -3.7%). This contributed to the relative weakness in the information technology sector today. Treasury yields fell sharply on the heels of the June ISM Manufacturing Index release but settled the session near intraday highs. The 2-yr note yield fell ten basis points to 2.83%, versus the intraday high of 2.86%. The 10-yr note yield fell eight basis points to 2.89%, versus the intraday high of 2.90%.Reviewing today's economic data:The June ISM Manufacturing Index decreased to 53.0% (Briefing.com consensus 55.0%) from 56.1% in May. A number above 50.0% is indicative of expansion. June marked the 25th consecutive month of expansion in the manufacturing sector, although the June reading was the lowest reading since June 2020.The key takeaway from the report is that it connotes a clear slowdown in manufacturing activity, highlighted by the first contraction in new order activity in 25 months.Total construction spending declined 0.1% month-over-month in May (Briefing.com consensus 0.4%) following an upwardly revised 0.8% increase (from 0.2%) in April. Total private construction was flat month-over-month while total public construction decreased 0.8%. On a year-over-year basis, total construction spending was up 9.7%.The key takeaway from the report is that weak levels of public construction spending were not offset by private residential spending, which was on the softer side due to the weakening housing starts activity (-14.4% month-over-month) in May.The June IHS Markit Manufacturing PMI - Final reading was 52.7 versus the prior reading of 52.4.As a reminder, bond and equity markets will be closed Monday for Independence Day. Looking ahead to Tuesday, economic data will be limited to May Factory Orders (prior 0.3%) at 10:00 a.m. ET.Dow Jones Industrial Average: -14.4% YTDS&P 500: -19.7% YTDS&P 400: -19.3% YTDRussell 2000: -23.1% YTDNasdaq Composite: -28.9% YTD