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End of Day Brief - Thursday June 17 - Markets mixed

SP 5004221.86-1.84(-0.04%)
10-yr Note +6/321.515
NYSEAdv 1122 Dec 2079 Vol 1.2 bln
NasdaqAdv 1801 Dec 2339 Vol 4.5 bln

Industry Watch

Strong: Information Technology, Communication Services, Consumer Discretionary, Health Care
Weak: Financials, Materials, Industrials, Energy

Moving the Market

-- S&P 500 closes flat as growth stocks rally and value stocks fall

-- 10-yr yield retraced yesterday's post-FOMC pop, commodities were weak

-- Weekly initial claims unexpectedly increased to 412,000 ( consensus 350,000)

S&P closes flat as growth stocks rise and value stocks decline

Dow -210.22 at 33823.45, Nasdaq +121.67 at 14161.35, S&P -1.84 at 4221.86

[BRIEFING.COM] The S&P 500 (-0.04%) closed flat on Thursday in a mixed session that included pronounced weakness in value/cyclical stocks and notable strength in growth stocks. The Nasdaq Composite gained 0.9%, while the Dow Jones Industrial Average (-0.6%) and Russell 2000 (-1.2%) underperformed in negative territory.

The divergence between growth and value was more plainly manifested in the 1.1% gain in the iShares S&P 500 Growth ETF ($IVW 70.77, +0.74, +1.1%) and the 1.3% decline in the iShares S&P 500 Value ETF ($IVE 146.34, -1.91, -1.3%). This disparity was exacerbated when the 10-yr yield took a precipitous intraday drop.

The 10-yr yield briefly fell 12 basis points to 1.47% before settling the session at 1.51%, or just above where it was trading prior to the FOMC statement yesterday. This retracement was interpreted as an acceptance of the Fed's view that a lot of inflation pressures have been, and should be, transitory and a complementary view that inflation/growth rates could be peaking.

Likewise, inflation pressures via commodity prices continued to deflate. Futures contracts for copper ($4.18/LB, -0.21, -4.7%), gold (1775.00/ozt, -87.00, -4.7%), and WTI crude ($71.07/BBL, -0.99, -1.4%) fell sharply amid a stronger U.S. dollar (91.94, +0.81, +0.9%).

Cyclical stocks, which really ran with the reflation story prior to June, took it on the chin today as investors continued to take profits given the unfavorable price action in Treasury yields and commodities. The S&P 500 energy (-3.5%), financials (-2.9%), materials (-2.2%), and industrials (-1.6%) sectors posted noticeable declines, while every other sector closed higher.

The mega-caps within the information technology (+1.2%), communication services (+0.6%), and consumer discretionary (+0.6%) sectors provided key support for the market amid the decline in long-term interest rates. The Vanguard Mega Cap Growth ETF ($MGK 225.16, +2.80, +1.3%) rose 1.3%.

The health care sector (+0.8%) also outperformed, supported by 1) the Supreme Court upholding the Affordable Care Act, 2) news the U.S. will invest $3.2 billion on pills to treat COVID-19 and other viruses, and 3) Danaher ($DHR 257.08, +12.34, +5.0%) agreeing to acquire Aldevron for $9.6 billion in cash.

The Fed-sensitive 2-yr yield increased one basis point to 0.22%, clinging onto the possibility that the Fed could hike rates sooner than previously indicated. One bit of news that likely didn't cause the Fed to want to rush policy changes, though, was the latest report on weekly initial claims, which unexpectedly increased to 412,000 ( consensus 350,000).

Reviewing Thursday's economic data:

  • Initial claims for the week ending June 12 increased by 37,000 to 412,000 ( consensus 350,000) from last week's downwardly revised level of 375,000 (from 376,000). Continuing claims for the week ending June 5 increased by 1,000 to 3.518 million from last week's upwardly revised level of 3.517 million (from 3.499 million).
    • The key takeaway from the report is that it underscores the volatile nature of the current labor market, as claims jumped against expectations for a drop to a new low since the start of the pandemic.
  • The Conference Board's Leading Economic Index (LEI) increased 1.3% in May ( consensus 1.2%) after increasing a revised 1.3% (from 1.6%) in April.
    • The key takeaway from the report is that overall growth remained widespread with only two components of the index making small negative contributions.
  • The Philadelphia Fed Survey for June fell to 30.7 ( consensus 30.0) from 31.5 in May.

There is no economic data of note scheduled for Friday.

  • Russell 2000 +15.8% YTD
  • S&P 500 +12.4% YTD
  • Dow Jones Industrial Average +10.5% YTD
  • Nasdaq Composite +9.9% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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