Last Updated 4:05 PM EST
Stock indices finished today’s trading session mixed. The Nasdaq 100 (NDX) gained 0.07%. Conversely, the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) fell 0.2% and 0.59%, respectively.
The industrial sector (XLI) was the session’s laggard, as it fell 0.53%. Conversely, the utilities sector (XLU) was the session’s leader, with a gain of 0.45%.
Furthermore, the U.S. 10-Year Treasury yield saw little change, as it hovers around 3.69%. Conversely, the Two-Year Treasury yield decreased to 4.48%. This brings the spread between them to -79 basis points.
Compared to Friday, the market is pricing in a higher chance of a lower Fed Funds rate for December 2023. In fact, the market’s expectations for a rate in the range of 4.75% to 5% increased to 33.4% compared to Friday’s expectations of 30.8%.
In addition, the market is now also assigning a 35.3% probability to a range of 5% to 5.25%. For reference, investors had assigned a 36.1% chance Friday.
Last Updated 2:35PM EST
Equity markets are in the red so far in today’s trading session. As of 2:35 p.m. EST, the Dow Jones Industrial Average (DJIA), the S&P 500 (SPX), and the Nasdaq 100 (NDX) were down 0.5%, 0.2%, and 0.01%, respectively.
Michael Wilson and his team of strategists at Morgan Stanley predict a downturn in U.S. corporate earnings and, consequently, in equities averages. They attribute this anticipated slump to several factors, including the expectation that the Federal Reserve won’t ease policy this year, the projected liquidity crunch as the Treasury sells bonds to replenish its funds, and concerns about the sustainability of growth.
They predict a 16% year-over-year drop in S&P 500 EPS in 2023, followed by a sharp rebound in 2024, given their view that policy will become more accommodating in 2024 rather than in 2023. Their 12-month S&P 500 target is 4,200, with a base case end-2023 target of 3,900.
In other economic news, April factory orders showed a marginal increase of 0.4% month-over-month to $577.5 billion, falling short of the 1.1% consensus and lower than March’s revised figure of 0.6%. However, when transportation was excluded, factory orders saw a dip of 0.2%.
The month also witnessed a 0.4% or $2.5 billion drop in shipments, marking the fifth decrease in six months, while unfilled orders rose by $10.4 billion or 0.8%. After two consecutive months of decline, inventories dropped again by $4.2 billion or 0.5%, bringing the inventories-to-shipments ratio to 1.50 from 1.48 in March, according to the U.S. Census Bureau.
Last Updated 11:50AM EST
Equity markets are mixed so far in today’s trading session. As of 11:50 a.m. EST, the Dow Jones Industrial Average (DJIA) was down 0.2%. Conversely, the S&P 500 (SPX) and the Nasdaq 100 (NDX) were up 0.3% and 0.7%, respectively.
On Monday, the Institute for Supply Management released its monthly report for the ISM Non-Manufacturing Purchasing Managers’ Index, which measures the overall economic condition of the non-manufacturing sector.
A number over 50 represents an expansion, whereas anything below 50 signals a contraction. The report came in at 50.3, lower than the expected 51.8 and lower than last month’s reading of 51.9.
It’s worth noting that this indicator has been in an overall downtrend since peaking in December 2021, when it hit a high of 69.1. If this trend continues, it might not take long before the non-manufacturing sector enters into a period of sustained contraction.
Furthermore, the ISM Non-Manufacturing Employment report came in at 49.2, which missed expectations of 51 and indicated a contraction.
Last updated:9:30 AM EST
Stocks were mixed at open at the start of the week, with the S&P 500 (SPX) hovering near a ten-month high and was up by 0.12% while the Nasdaq 100 (NDX) ticked higher by 0.15% while the Dow Jones Industrial Average (DJIA) inched lower at 0.01%, respectively, at 9:30 a.m., EST, June 5.
First published:5:00 AM EST
U.S. stock futures were mixed on Monday morning after markets ended last week on a strong note, thanks to the robust May jobs report that reflected a resilient economy. Futures on the Nasdaq 100 (NDX) were down 0.21%, while those on the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) were up 0.01% and 0.12%, respectively, at 4.59 a.m., EST, June 5.
Moreover, over the weekend, U.S. President Joe Biden signed the debt ceiling bill into law, addressing fears about a potential default. With Friday’s strong surge, the S&P 500 gained 1.83% last week, while the Dow Jones and Nasdaq 100 advanced over 2% and 1.74%, respectively.
Meanwhile, the strong May jobs market has sparked uncertainty on whether the Federal Reserve will continue or pause its interest rate hikes to bring inflation under control. All eyes are now on the Fed’s June 13-14 meeting. Ahead of Fed’s blackout period and the crucial rate-hike decision, traders will look at three economic releases this week for more cues – May’s ISM Services PMI and April’s Factory Orders on Monday, and April’s Consumer Credit report on Wednesday.
Oil futures were up on Monday as Saudi Arabia announced its decision to slash its output by an additional 1 million barrels per day from July. Saudi’s latest cut is on top of a broader deal by OPEC+ to limit supply into 2024, as the group aims to address the declining oil prices.
Elsewhere, European indices were muted as traders absorbed the U.S. debt ceiling deal and Eurozone inflation data released last week.
Most Asia-Pacific Indices Rise on Monday
Most Asia-Pacific indices closed Monday on a positive note following the surge in U.S. stocks last week and in reaction to the news on the debt ceiling agreement. In particular, Japan’s Nikkei and Topix indices rose 2.2% and 1.7% higher, respectively, with Nikkei touching its 33-year intraday high.
Hong Kong’s Hang Seng Index witnessed a 0.84% gain, extending the 4% gain seen on Friday.
China’s Shanghai Composite Index climbed 0.07%, while the Shenzhen Component Index declined 0.47%.
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