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End of Day Brief - Friday June 25 - Market mostly up, S&P new high

SP 5004280.70+14.21(0.33%)
10-yr Note -25/321.527
NYSEAdv 1757 Dec 1456 Vol 2.8 bln
NasdaqAdv 2314 Dec 1827 Vol 7.2 bln

Industry Watch

Strong: Financials, Utilities, Consumer Staples
Weak: Information Technology

Moving the Market

-- Financial stocks led the S&P 500 to new record highs

-- Long-term interest rates increased following some hot PCE data for May

-- Banks easily passed the Fed's latest stress test

-- Nike (NKE) rose 15% on strong earnings report/upbeat guidance

S&P 500 makes another record high

Dow +237.02 at 34433.84, Nasdaq -9.32 at 14360.39, S&P +14.21 at 4280.70

[BRIEFING.COM] The S&P 500 (+0.3%) set new intraday and closing record highs on Friday, largely due to strength in the financial stocks. PCE inflation data for May remained on the hotter side, which contributed to a bump in long-term interest rates.

The Dow Jones Industrial Average outperformed with a 0.7% gain, while the Nasdaq Composite (-0.1%) closed lower as the higher rates clipped its growth-stock components. The Russell 2000 (+0.03%) erased its intraday gain in the last ten minutes of action, as trading volume surged at the close amid the annual FTSE Russell index rebalance.

Specifying the data, the PCE Price Index for May rose 0.4% m/m and the core-PCE Price Index, which excludes food and energy, rose 0.5% m/m ( consensus 0.6%). On a year-over-year basis, the Fed's preferred measures of inflation were up 3.9% and 3.4%, respectively. The 10-yr yield increased five basis points to 1.54% after an initial muted reaction.

The higher rates naturally worked in the favor of the S&P 500 financials sector (+1.3%), which was further supported by expectations for increases to share buyback programs and/or dividend payments after a positive showing in the Fed's latest stress test. The utilities sector (+1.1%) joined the financials sector with a gain over 1.0%.

The information technology sector (-0.2%) was the only sector that closed lower, which really held back the benchmark index given it's the most heavily-weighted sector in the S&P 500. Money seemed to prefer the value/cyclical stocks, many of which saw renewed strength this week.

Nike ($NKE 154.35, +20.75, +15.5%) and CarMax ($KMX 127.40, +7.97, +6.7%) stood out with nice earnings-driven gains, especially Nike's 15% move after also issuing upbeat FY22 guidance. FedEx ($FDX 291.95, -10.99, -3.6%), on the other hand, underwhelmed shareholders with its small EPS beat.

The 2-yr yield was unchanged at 0.27%. The U.S. Dollar Index was little changed at 91.78. WTI crude futures rose 1.0%, or $0.75, to $74.06/BBL.

Reviewing Friday's economic data:

  • Personal income decreased 2.0% month-over-month in May ( consensus -2.5%), driven by an 11.8% decline in government social benefits, while personal spending was unchanged ( consensus +0.3%) following an upwardly revised 0.9% increase (from +0.5%) in April. The PCE Price Index jumped 0.4% month-over-month and was up 3.9% year-over-year (versus 3.6% in April). The core-PCE Price Index, which excludes food and energy, rose 0.5% and was up 3.4% year-over-year (versus 3.1% in April).
    • The key takeaway from the report is the initial reaction to it. The inflation readings are eye-popping, yet the futures for the major indices went up in their wake while long-term bond yields barely moved. The seeming connection in those reactions is that this is at, or close to, peak inflation, meaning market participants are anticipating better inflation news in coming months.
  • The final June reading for the University of Michigan Index of Consumer Sentiment slipped to 85.5 ( consensus 86.4) from the preliminary reading of 86.4. The final reading for May was 82.9.
    • The key takeaway from the report is the understanding that the uptick in sentiment in June was driven by households with incomes above $100,000 and their view of future economic prospects.

Investors will not receive any notable economic data on Monday.

  • Russell 2000 +18.2% YTD
  • S&P 500 +14.0% YTD
  • Dow Jones Industrial Average +12.5% YTD
  • Nasdaq Composite +11.4% 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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