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Financials, Materials Lead Another Positive Outing
06-Jun-18 16:15 ET
Dow +346.41 at 25146.39, Nasdaq +51.38 at 7689.24, S&P +23.55 at 2772.35

https://www.briefing.com/investor/markets/stock-market-update/2018/6/6/financials-materials-lead-another-positive-outing.htm

[BRIEFING.COM] Stocks rallied for a fourth straight session on Wednesday, with financials and materials shares leading the charge. The Nasdaq and the Russell 2000 hit new record highs for the third day in a row, adding 0.7% apiece, and the Dow led the major indices with a solid gain of 1.4%. The benchmark S&P 500 index added 0.9%, closing at its best level in three months.

10 of 11 S&P 500 sectors advanced on Wednesday. The financial space (+1.8%) was strong throughout the session, underpinned by a sharp rise in Treasury yields, which hit their highest levels in nearly two weeks. The yield on the benchmark 10-yr Treasury note climbed six basis points to 2.98%. The materials (+1.9%), consumer discretionary (+1.0%), health care (+1.2%), and telecom services (+1.5%) sectors were also notably strong.

On the flip side, rising yields weighed on the interest-rate-sensitive utilities sector, which finished at the bottom of the sector standings with a loss of 2.1%. The top-weighted technology group finished in the green with a gain of 0.5%, but had trouble keeping up with the broader market. Within the space, Facebook (FB 191.34, -1.60) was particularly weak, dropping 0.8%, after reports that the company gave data access to at least four Chinese electronics companies, including one flagged by American intelligence officials as a national security threat.

In other corporate news, Tesla (TSLA 319.50, +28.37) spiked 9.7% after its CEO, Elon Musk, said at the company's annual shareholder meeting on Tuesday evening that it's "quite likely" that Tesla will hit its target for producing 5,000 Model 3 electric vehicles per week by the end of June. Signet Jewelers (SIG 52.27, +8.12) also had a strong outing, soaring 18.4%, after reporting better-than-expected earnings and revenues for the first quarter and reaffirming its earnings guidance for the fiscal year.

The energy sector (+0.6%) was volatile on Wednesday after the Department of Energy reported an unexpected build in crude oil inventories. The DOE said that U.S. crude stockpiles increased by 2.1 million barrels last week, while estimates had expected a draw of around 3.6 million barrels. West Texas Intermediate crude futures were down around 0.2% ahead of the release, but finished the session lower by 1.1% at $64.76 per barrel, which ties a two-month low.

In Europe, ECB officials said that inflation is moving towards the 2.0% target, suggesting that next week's policy meeting could provide investors with some guidance about the wind-down of the central bank's asset purchase program. The euro climbed to a two-week high against the U.S. dollar following the comments, jumping 0.5% to 1.1772.

Reviewing Wednesday's economic data, which included the April Trade Balance, the revised readings for first quarter Productivity and Unit Labor Costs, and the weekly MBA Mortgage Applications Index:

The April trade balance showed a deficit of $46.2 billion (Briefing.com consensus -$48.8 billion). The March deficit was revised to $47.2 billion from $49.0 billion.
The key takeaway from the report is that the real goods deficit in April was 6.0% less than the first quarter average, which suggests net exports should be factored as a positive input for upbeat Q2 GDP growth forecasts.
First quarter unit labor costs were revised upward to 2.9% (Briefing.com consensus +2.8%) from +2.7% in the preliminary reading, while first quarter productivity was revised to +0.4% (Briefing.com consensus +0.6%) from +0.7% in the preliminary reading.
The key takeaway from the report is that productivity continues to run at relatively weak levels, which will stand in the way of GDP growth maintaining an accelerated growth rate above 3.0%.
The weekly MBA Mortgage Applications Index increased 4.1% to follow last week's decrease of 2.9%.

On Thursday, investors will receive weekly Initial Claims (Briefing.com consensus 225K) and April Consumer Credit (Briefing.com consensus $13.9 billion).

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Russell 2000 +9.2% YTD
S&P 500 +3.7% YTD
Dow Jones Industrial Average +1.7% YTD