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Recovery rally sends S&P 500 back above 3100
03-Jun-20 16:15 ET
Dow +527.24 at 26269.89, Nasdaq +74.54 at 9682.94, S&P +42.05 at 3122.74

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 extended its recovery rally by 1.4% on Wednesday, as the latest data continued to depict signs of a turnaround in the economy. The Dow Jones Industrial Average (+2.1%) and Russell 2000 (+2.4%) rose more than 2.0%, while the Nasdaq Composite (+0.8%) struggled to keep pace.

Specifically, the ADP Employment Change Report estimated 2.76 million private-sector jobs were lost in May versus consensus estimates that were closer to 9.0 million. The ISM Non-Manufacturing Index rebounded to 45.4% in May (Briefing.com consensus 44.0%) from 41.8% in April, which indicated a decelerating pace of contraction.

Those weren't good numbers, but they corroborated the market's thinking that things will improve as the economy continues to reopen. This outlook continued to fuel the big rebounds in the beaten-down cyclical sectors, as well as foreign equities, some of which have also been aided by talks of fiscal stimulus.

Within the S&P 500, the industrials (+3.9%), financials (+3.8%), and energy (+3.1%) sectors advanced the most and carried the benchmark index back above the 3100 level. The continued rise in oil prices ($37.56/bbl, +0.46, +1.3%) following an unexpected decline in weekly crude inventories was an added benefit for energy stocks. The health care sector (-0.2%) closed lower.

In corporate news, Lyft (LYFT 34.44, +2.76, +8.7%) said rides were up 20% in May versus April (but down 70% yr/yr), while Zoom Video (ZM 223.87, +15.79, +7.6%) provided impressive quarterly results and guidance.

Safe-haven assets were out of favor amid the bullish bias in stocks. Gold futures declined 1.7% to $1704.90/ozt, the U.S. Dollar Index declined 0.4% to 97.28, and the 10-yr yield rose eight basis points to 0.76%. The 2-yr yield increased three basis points to 0.19%.

Separately, an interesting report from The Wall Street Journal indicated that several executives from the poultry industry were indicted on allegations of price fixing. Shares of Tyson Foods (TSN 60.10, -2.40, -3.8%) fell into negative territory following the report.

Reviewing Wednesday's economic data:

The ISM Non-Manufacturing Index rebounded to 45.4% in May (Briefing.com consensus 44.0%) from 41.8% in April. The dividing line between expansion and contraction is 50.0%.
The key takeaway from the report is that the pace of contraction in the non-manufacturing sector decelerated in May. Things still aren't good in terms of business activity, but they were evidently considered by respondents to be less bad than what was seen in April.
The ADP Employment Change Report estimated 2.76 million private-sector jobs were lost in May versus consensus estimates that were closer to 9.0 million.
New orders for manufactured goods declined 13.0% m/m in April, as expected, following a downwardly revised 11.0% decline (from -10.3%) in March.
The key takeaway from the report is that the weakness was driven by durable goods orders, which declined 17.7%, hurt by a 48.3% decline in transportation equipment orders.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, revised Q1 figures for Productivity and Unit Labor Costs, and the Trade Balance report for April on Thursday.

Nasdaq Composite +7.9% YTD
S&P 500 -3.3% YTD
Dow Jones Industrial Average -8.0% YTD
Russell 2000 -13.0% YTD

Market Snapshot
Dow 26269.89 +527.24 (2.05%)
Nasdaq 9682.94 +74.54 (0.78%)
SP 500 3122.74 +42.05 (1.36%)
10-yr Note -29/32 0.755
NYSE Adv 2342 Dec 556 Vol 1.1 bln
Nasdaq Adv 2248 Dec 1031 Vol 4.6 bln

Industry Watch
Strong: Financials, Energy, Industrials
Weak: Health Care

Moving the Market

-- Recovery rally lifts S&P 500 back above the 3100 level

-- Relative strength in the cyclical sectors

-- Better-than-feared economic data regarding the labor market and services sector

WTI crude gains amid decline in weekly inventories
03-Jun-20 15:25 ET
Dow +525.44 at 26268.09, Nasdaq +82.08 at 9690.48, S&P +43.44 at 3124.13

[BRIEFING.COM] The S&P 500 continues to trade at session highs with a current 1.4% gain. For the week, it is now up 2.6%.

One last look at the S&P 500 sectors shows financials (+3.9%), industrials (+3.7%), and energy (+2.9%) continuing to lead in gains, while the health care sector (-0.3%) is the lone holdout.

WTI crude futures rose $0.46 (+1.3%) to $37.26/bbl. On a related note, weekly crude oil inventories decreased by 2.1 mln barrels after increasing by 7.93 mln during the previous week.