S&P 500 and Nasdaq Make Modest Advances, Dow Rises 140 Points

Vida Markets

Wednesday 5th June 2024, 9:05 am Time to read: 6 mins.

Despite a turbulent start to June, the Dow Jones Industrial Average closed higher on Tuesday, demonstrating resilience as Wall Street navigated uneven market conditions. Both the S&P 500 and Nasdaq Composite posted modest gains, while lower Treasury yields and a drop in small-cap stocks reflected cautious investor sentiment. With a focus on upcoming economic indicators,

Despite a turbulent start to June, the Dow Jones Industrial Average closed higher on Tuesday, demonstrating resilience as Wall Street navigated uneven market conditions. Both the S&P 500 and Nasdaq Composite posted modest gains, while lower Treasury yields and a drop in small-cap stocks reflected cautious investor sentiment. With a focus on upcoming economic indicators, particularly the nonfarm payrolls report for May, investors are weighing the likelihood of interest rate cuts against persistent inflationary pressures.

Key Takeaways:

Dow Jones Closes Over 140 Points Higher: The Dow Jones Industrial Average rose by 140.26 points, or 0.36%, to close at 38,711.29. This gain highlights a recovery effort after a volatile start to June, showing investor resilience.
S&P 500 and Nasdaq Show Small Shifts: The S&P 500 increased by 0.15% to 5,291.34, while the Nasdaq Composite advanced 0.17% to close at 16,857.05. However, the small-cap Russell 2000 index dropped more than 1% during the session, highlighting sector-specific pressures and investor hesitancy towards smaller-cap stocks.
Treasury Yields Fall: The yield on the 10-year Treasury note fell by approximately 7 basis points, signalling cautious investor sentiment. The 2-year Treasury yield also dipped about 5 basis points, reflecting ongoing economic uncertainty.
Labour Market Data Shows Decrease in Job Openings: The Labour Department reported 8.059 million job vacancies in April, the lowest level in over three years and below the expected 8.4 million. This decline in job openings is a key indicator for the Federal Reserve’s future interest rate decisions.
European Markets Close Lower: The pan-European Stoxx 600 index fell 0.5%, with significant losses in mining stocks, down 2.3%, and banking stocks, down 2.1%. Italy's UniCredit saw a 4% drop ahead of the European Central Bank’s upcoming rate decision.
Asian Markets Mixed Amid Election Volatility: India’s Nifty 50 and BSE Sensex both dropped around 5% due to election uncertainties. Japan’s Nikkei 225 fell 0.22% to 38,837.46, while South Korea’s Kospi declined 0.76% to 2,662.10. Conversely, Hong Kong’s Hang Seng index rose 0.12%, and China’s CSI 300 index increased 0.75% to 3,615.67.
Crude Oil Prices Continue to Decline: WTI US Crude Oil significantly fell to near $72.50, marking a 16% decline over the year, amid market scepticism over OPEC+ production plans. Energy stocks such as BP and Exxon Mobil fell by 2.3% and 1.6%, respectively. Brent Oil shifted down 84 cents, or 1.07% to $77.52 a barrel. Year to date, the global benchmark is up 0.62%.

FX Today:

Gold Prices Retreat Amid Risk-Off Sentiment and Falling Yields: Gold prices dropped 1% as commodities faced widespread pressure. The latest US economic data indicates a slowing economy, increasing the likelihood of lower interest rates. Despite this, XAU/USD trades at $2,315, below the 50-day Simple Moving Average (SMA) of $2,334. The bearish momentum could pave the way for further declines, with key support levels at $2,303 and $2,277. A move above $2,350 could target $2,400, followed by the year-to-date high of $2,450 and $2,500.

GBP/USD Retreats from Three-Month High: The British Pound fell against the US Dollar after hitting a three-month high of 1.2817, retreating below 1.2800 during the European session. The pair traded at 1.2772, down 0.27%. Support levels are at 1.2694, followed by the 100-day Moving Average (DMA) at 1.2635 and the 1.2600 mark. Reclaiming 1.2800 could lead to a test of the year-to-date high of 1.2893.

USD/JPY Bears Take Their Shot: The USD/JPY pair fell sharply, dropping below the 50% midpoint at 155.65 and the 61.8% retracement at 155.16. Support between 154.59 and 154.88 stalled the fall, with sellers failing multiple attempts to break lower. A move above 155.16 is needed to increase the bearish bias and provide comfort to dip buyers.

CAD Sheds Weight Amid Broad-Market Rate Cut Woes: The Canadian Dollar fell on Tuesday, erasing recent gains against the US Dollar. USD/CAD remains mired in technical congestion around 1.3600, climbing into the 1.3700 handle after shedding over 0.4% against the Greenback. The pair faces near-term demand above 1.3600, with long-term support at the 200-day Exponential Moving Average (EMA) at 1.3560.

USD/CHF Dips on Soft US Data: USD/CHF faced turbulence, dipping towards 0.8880. Technical indicators signal oversold conditions, with the daily RSI and MACD both in negative territory. The pair lost positions above the 20-day SMA at 0.9095 and the 100-day SMA, pointing to a bearish short-term outlook. The 200-day SMA offers additional support.

NZD/JPY Bears Gain Ground: The NZD/JPY pair faced sustained selling pressure, with critical support at 95.30 holding strong. The pair remains bullish as long as it stays above 95.00 and 94.00. The 20-day SMA at 95.30 provides additional support, showing resilience among buyers despite recent selling pressure.
Market Movers:

CrowdStrike Jumps on Strong Quarterly Results: CrowdStrike shares surged 7% after the company reported better-than-expected quarterly results and guidance. The cybersecurity firm posted adjusted earnings of 93 cents per share and $921 million in revenue for the first quarter, exceeding analyst forecasts of 89 cents per share in earnings and $905 million in revenue.
Hewlett Packard Enterprise Rallies on Financial Report: Hewlett Packard Enterprise stock climbed about 11% after the company delivered a stronger-than-expected financial report for the fiscal second quarter. The tech giant reported adjusted earnings of 42 cents per share on revenue of $7.2 billion, surpassing analyst estimates of 39 cents per share in earnings and $6.82 billion in revenue.
Verint Systems Climbs on Earnings Beat and Guidance Raise: Verint Systems shares rose 6.4% after the company posted better-than-expected quarterly results and raised its full-year guidance. The customer interface platform reported adjusted earnings of 59 cents per share on $221.3 million in revenue for the first quarter, topping analyst expectations of 54 cents per share in earnings and $214.5 million in revenue.
Guidewire Software Soars on Raised Guidance: Guidewire Software shares jumped 8% after the company raised its fiscal-year revenue guidance to a range of $968 million to $976 million, exceeding the $964.4 million anticipated by analysts. The software maker for insurance companies also beat expectations on both the top and bottom lines in its fiscal third quarter.
Bath & Body Works Sinks on Disappointing Guidance: Shares of Bath & Body Works plunged nearly 13%, marking their worst day since 2021. Despite beating first-quarter earnings and revenue estimates, the retailer offered disappointing second-quarter guidance, projecting earnings between $0.31 and $0.36 per share, falling short of the FactSet estimate of $0.38.
Carnival Shares Surge on Strategic Moves: Carnival Corporation saw its stock rise by approximately 5.8% after announcing it will fold P&O Cruises Australia into Carnival Cruise Line. This move is part of a broader strategy to increase capacity for its flagship brand.
GameStop Retreats After Rally: GameStop, known as a meme stock, dropped around 5.4% following a 21% rally the previous day. The surge was driven by investor Keith Gill, aka "Roaring Kitty," who shared a screenshot of his portfolio showing five million common shares and 120,000 call option contracts. Despite the retreat, the stock remains a focal point for retail investors.
Saia Jumps on Strong Freight Data: Saia Inc. shares climbed 6.7% after the freight company reported higher less-than-truckload shipments per workday for April and May compared to a year earlier. This performance led to gains in other freight stocks, with Old Dominion Freight Line and XPO rising around 1.7% and 1%, respectively.
Energy Stocks Decline on Oil Price Drop: Energy stocks were pressured as oil prices fell. Shares of BP and Exxon Mobil dropped approximately 2.3% and 1.6%, respectively, while Diamondback Energy and Chevron shares decreased by nearly 1%. This slump followed OPEC+'s announcement to phase out 2.2 million barrels per day of production cuts from October 2024 through September 2025.
Stanley Black & Decker Falls on Downgrade: Stanley Black & Decker's shares declined about 3.7% after Barclays downgraded the stock from overweight to equal weight. The analyst cited overly optimistic earnings estimates and anticipated downward pressure on sales and production due to high inventories.
Boot Barn Climbs on Positive Sales Data: Boot Barn Holdings saw its stock rise by approximately 4.5% after reporting a 1.4% increase in same-store sales for the first nine weeks of the fiscal first quarter. This exceeded previous guidance which had anticipated a decline in same-store sales.
As June continues to unfold, the markets reflect a delicate balance of hope and caution. The Dow’s rise of over 100 points and modest gains in the S&P 500 and Nasdaq suggest a resilient investor sentiment amid mixed economic signals. With significant declines in sectors like energy and retail, coupled with strategic corporate moves and analyst actions, investors are navigating a complex landscape. Key economic data, particularly the upcoming nonfarm payrolls report, and central bank decisions remain critical in shaping market directions. Amid these dynamics, the market's overall mood is one of careful anticipation, with a close watch on evolving economic indicators and their potential impacts.


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