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Modest Victory for S&P; Nasdaq Hits New Record
14-Jun-18 16:30 ET
Dow -25.89 at 25175.31, Nasdaq +65.34 at 7761.05, S&P +6.86 at 2782.49

https://www.briefing.com/investor/markets/stock-market-update/2018/6/14/modest-victory-for-s-and-p-nasdaq-hits-new-record.htm

[BRIEFING.COM] The S&P 500 drifted within a pretty tight range on Thursday, eventually settling with a modest gain of 0.3%. Investors were still wrestling with the Fed's upped rate-hike forecast and received another central bank policy decision, this time from the ECB. The Dow (-0.1%) struggled to keep pace, but the tech-heavy Nasdaq (+0.9%) outperformed, hitting a new all-time high.

As expected, the European Central Bank left its key policy rate unchanged on Thursday morning and announced a plan to end its asset purchase program. The ECB in September will cut its monthly purchases in half, from EUR30 billion to EUR15 billion, and then end purchases altogether three months later -- although it will continue to reinvest the principal from maturing securities. As for interest rates, the ECB said they will remain at their present levels "at least through the summer of 2019."

The euro dove sharply following the ECB's policy release and was down about 1.7% against the U.S. dollar at the closing bell in New York. The yield on Germany's 10-yr bund also slid, going from 0.50% to 0.42%, but U.S. Treasury yields were mostly lower even before the ECB decision. The yield on the benchmark 10-yr Treasury note slid three basis points to 2.95%, but the 2-yr yield bucked the trend, rising two basis points to 2.58%. That left the 2-10 spread at its lowest level in more than a decade.

Lenders, which make money on the difference between what they charge for loans and what they pay on deposits, dropped with the 2-10 spread, sending the S&P 500's financial sector to the bottom of the sector standings. The financial group lost 0.9% and was one of only three groups -- industrials (-0.4%) and energy (-0.2%) being the others -- to close in the red.

On the flip side, eight sectors advanced on Thursday. The lightly-weighted utilities group (+1.2%) was the top performer, continuing to rebound after a poor start to the month, and the consumer discretionary sector (+1.0%) was also a notable outperformer. Within the consumer discretionary space, media names were in focus once again after Comcast (CMCSA 33.82, +1.50, +4.6%) outdid Disney's (DIS 108.75, +2.44, +2.3%) all-stock bid for the bulk of 21st Century Fox's (FOXA 44.58, +0.92, +2.1%) assets, offering $65 billion in cash.

Meanwhile, in the tech sector (+0.6%), Twitter (TWTR 46.76, +2.69) added another 6.1% and is now up 16.6% since being added to the S&P 500 on June 7. Social media peer Facebook (FB 196.81, +4.40) also did well, adding 2.3%, but Oracle (ORCL 45.90, -2.37) struggled, losing 4.9% after being downgraded to 'Neutral' from 'Overweight' at JP Morgan.

In Washington, the White House is reportedly planning to roll out on Friday a shorter list of tariffs on imports from China, according to CNBC. The updated list is expected to include between 800 and 900 products, down from around 1,300 products originally. The market had a muted reaction to the news.

Reviewing Thursday's economic data, which included Retail Sales for May, weekly Initial Claims, Export and Import Prices for May, and April Business Inventories:

May retail sales rose 0.8% (Briefing.com consensus +0.4%), while the April increase was revised to 0.4% from 0.3%. Excluding autos, retail sales increased 0.9% in May (Briefing.com consensus +0.5%), and the April increase was revised to 0.4% from 0.3%.
The key takeaway from the report is that consumer spending on goods was strong in May, which will feed expectations for a healthy pickup in second quarter GDP growth.
The latest weekly initial jobless claims count totaled 218,000, while the Briefing.com consensus expected a reading of 223,000. Today's tally was below the unrevised prior week count of 222,000. As for continuing claims, they declined to 1.697 million from a revised count of 1.746 million (from 1.741 million).
The key takeaway from the report is the same as last week: the low level of initial and continuing jobless claims is consistent with a tight labor market.
Import prices excluding oil rose 0.6% in May after rising a revised 0.6% in April (from +0.2%), and export prices excluding agriculture increased 0.5% after rising an unrevised 0.7% in April.
The key takeaway from the report is that import prices continued an upward trend that began in August 2017 and recorded their largest 12-month advance (+4.3%) since February 2017.
Business Inventories rose 0.3% in April (Briefing.com consensus +0.3%). The March reading was revised to -0.1% from 0.0%.
The inventories-to-sales ratio held steady at 1.35 month-over-month and was down from 1.38 in the same period a year ago.

Looking ahead, investors will receive on Friday morning the Industrial Production and Capacity Utilization report for May, the Empire Manufacturing report for June, and the preliminary reading of the University of Michigan Consumer Sentiment Index for June.

Also, the Bank of Japan will release its latest policy directive overnight. No changes are expected.

Nasdaq Composite +12.4% YTD
Russell 2000 +9.7% YTD
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Dow Jones Industrial Average +1.9% YTD