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S&P 500 Climbs While Small Caps Lag
02-Jul-19 16:15 ET
Dow +69.25 at 26786.68, Nasdaq +17.93 at 8109.09, S&P +8.68 at 2973.01

https://www.briefing.com/investor/markets/stock-market-update/2019/7/2/s-and-p-500-climbs-while-small-caps-lag.htm

[BRIEFING.COM] The Dow (+0.3%), Nasdaq (+0.2%), and S&P 500 (+0.3%) ended Tuesday on a modestly higher note thanks to a late push that lifted the indices out of the red. Relative weakness among small cap names sent the Russell 2000 lower by 0.6%.

Equity indices started the day near their flat lines while a modest wave of buying interest lifted the averages to session highs one hour after the open. However, the opening push saw limited participation from cyclical sectors, leading to a midday pullback. That lack of participation was most visible in the technology sector (+0.3%) where the PHLX Semiconductor Index lost 1.4%, trimming this week's gain to 1.2%. 22 out of 30 index members recorded losses of at least 1.0% while yesterday's leader—Inphi (IPHI 52.20, -1.47, -2.7%)—was the second weakest performer, falling 2.7%.

The broader technology sector was able to eke out a slim gain and its late strength helped send the key indices to fresh highs ahead of the close while most of the remaining cyclical sectors settled in the red. Financials (-0.2%) were pressured by renewed strength in Treasuries of longer tenors while energy (-1.7%) retreated amid a 4.8% drop in the price of oil. WTI crude fell beneath the confluence of its 50-day (58.72) and 200-day (58.74) moving averages, ending the day at its lowest level in eight sessions.

Elsewhere, relative weakness in the Dow Jones Transportation Average (-0.8%) kept the industrials sector (-0.1%) in negative territory. Delta Airlines (DAL 58.54, +0.75, +1.3%) bucked the trend among DJTA members, after boosting its Q2 guidance.

Staying on the earnings front, Greenbrier (GBX 28.71, -2.14, -6.9%) briefly slid to a fresh 2019 low after missing Q3 estimates and guiding Q4 results below expectations. Conversely, Amarin (AMRN 22.37, +3.13, +16.3%) rallied after issuing above-consensus guidance for Q2 and FY19.

Countercyclical sectors recorded gains across the board, which helped the S&P 500 stage its late rally. Rate-sensitive real estate (+1.8%) and utilities (+1.2%) finished in the lead.

Longer-dated Treasuries settled near their session highs while the 3-month bill underperformed with no apparent catalyst. The 10-yr yield fell six basis points to 1.98% while the 3-month yield rose three basis points to 2.19%.

Curiously, gold futures rallied to recover their entire decline from yesterday. The yellow metal settled higher by 1.5% at $1408.55/ozt and continued its advance after the 13:30 ET close of the pit session. The rally in gold accelerated after NBC reported that Vice President Mike Pence was called back to Washington just before his plane was about to touch down in New Hampshire. The vice president's spokeswoman later said that there is no cause for alarm while an unnamed White House official told Bloomberg that the reason for the return will be revealed "weeks from now."

On the international front, EU officials have agreed on nominees to top EU jobs. All nominations were in-line with this morning's report from Die Welt. Germany's Defense Minister Ursula von der Leyen was nominated to replace EU Commission President Jean-Claude Juncker while IMF Managing Director Christine Lagarde was nominated to take over for Mario Draghi at the ECB. Belgian Prime Minister Charles Michel was proposed as the replacement for EU Council President Tusk while Josep Borrell Fontelles was nominated to replace Federica Mogherini as the High Representative for Foreign Affairs and Security Policy. The nominees still need to be approved by the EU Parliament.

Investors did not receive any economic data of note. Tomorrow, the weekly MBA Mortgage Index (prior 1.3%) will be reported at 7:00 ET, followed by the June ADP Employment Change report (Briefing.com consensus 145,000; prior 27,000) at 8:15 ET. May trade balance (Briefing.com consensus -$54.40 bln; prior -$50.80 bln) and weekly Initial Claims (Briefing.com consensus 222,000; prior 227,000) will be reported at 8:30 ET while May Factory Orders (Briefing.com consensus -0.5%; prior -0.8%) and the June ISM Non-Manufacturing Index (Briefing.com consensus 55.8; prior 56.9) will be released at 10:00 ET.

Nasdaq Composite +22.2% YTD
S&P 500 +18.6% YTD
Russell 2000 +15.6% YTD
Dow Jones Industrial Average +14.8% YTD