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Mega-caps power Nasdaq to new record high after FOMC statement
10-Jun-20 16:20 ET
Dow -282.31 at 26989.99, Nasdaq +66.59 at 10020.37, S&P -17.04 at 3190.01

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

[BRIEFING.COM] The S&P 500 declined 0.5% on Wednesday in a volatile session following the June FOMC statement, while the Nasdaq Composite rose 0.7% to close at another record high. The Dow Jones Industrial Average (-1.0%) and Russell 2000 (-2.6%) continued to pull back from recent gains.

The Fed kept the target range for the fed funds rate unchanged at 0.00-0.25%, and its dot plot signaled rates will remain near zero through at least 2022. The Fed's economic projections called for a 6.5% contraction in 2020 GDP, followed by 5.0% growth in 2021. Core PCE inflation is expected to remain below the Fed's 2.0% target through 2020.

After the release of the policy directive, the S&P 500 erased prior losses and gained as much as 0.5%, but stocks quickly retraced those gains during Fed Chair Powell's press conference. Mr. Powell didn't say anything particularly new, reiterating the Fed's commitment to supporting the economy, but he did subtly urge Congress to do more.

Neither the statement nor the press conference altered today's trading theme, though. Like yesterday, continued strength in the mega-cap stocks provided major support at the index level. Within the S&P 500 sectors, the information technology sector was in a league of its own, rising 1.7% while no other sector finished higher.

The energy (-4.9%) and financials (-3.8%) sectors were hit relatively hard, with the financials space pressured by the Fed's acknowledgement of low rates for a while longer.

Notably, shares of Apple (AAPL 352.84, +8.85, +2.6%), Microsoft (MSFT 196.84, +7.04, +3.7%), Amazon (AMZN 2647.45, +46.59, +1.8%), Tesla (TSLA 1025.05, +84.38, +9.0%), and NVIDIA (NVDA 374.67, +12.83, +3.6%) rallied to new all-time highs. Several brokerage firms raised their price targets on AAPL, AMZN, and TSLA.

Separately, Starbucks (SBUX 79.01, -3.36, -4.1%) said it expects quarterly sales to decline as much as $3.2 billion and operating income to decline as much as $2.2 billion due to the coronavirus. SBUX shares fell 4%.

In the Treasury market, longer-dated maturities saw greater demand following the FOMC statement. The 2-yr yield declined three basis points to 0.17%, and the 10-yr yield declined eight basis points to 0.75%. The U.S. Dollar Index declined 0.3% to 96.02. WTI crude gained 1.6%, or $0.62, to $39.54/bbl.

Reviewing Wednesday's economic data, which included the Consumer Price Index for May:

The Consumer Price Index for May declined 0.1% m/m (Briefing.com consensus 0.0%) following a 0.8% decline in April. Core CPI, which excludes food and energy, also declined 0.1% (Briefing.com consensus 0.0%). That was the third straight monthly decline in core CPI, which is something that has never happened before.
The key takeaway from the report is that it shows a trend of disinflation that will keep the Fed favoring easy monetary policy and asset purchases for some time.
The weekly MBA Mortgage Applications Index rose 9.3% following a 3.9% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and the Producer Price Index for May on Thursday.

Nasdaq Composite +11.7% YTD
S&P 500 -1.3% YTD
Dow Jones Industrial Average -5.4% YTD
Russell 2000 -12.1% YTD

Market Snapshot
Dow 26989.99 -282.31 (-1.04%)
Nasdaq 10020.37 +66.59 (0.67%)
SP 500 3190.01 -17.04 (-0.53%)
10-yr Note +32/32 0.726
NYSE Adv 790 Dec 2103 Vol 1.2 bln
Nasdaq Adv 1211 Dec 2141 Vol 5.1 bln

Industry Watch
Strong: Information Technology
Weak: Energy, Financials, Industrials, Real Estate

Moving the Market

-- Mega-caps power Nasdaq to another record close, while the rest of the market continued to struggle

-- Fed kept fed funds rate unchanged and signaled rates will stay near zero at least through 2022, Fed Chair Powell subtly urges Congress to do more

-- Relative weakness in the cyclical sectors

WTI crude settles higher, extends gains
10-Jun-20 15:25 ET
Dow -189.17 at 27083.13, Nasdaq +97.71 at 10051.49, S&P -5.55 at 3201.50

[BRIEFING.COM] The S&P 500 is trading lower by 0.2%, while the Russell 2000 continues to underperform with a 2.2% decline.

One last look at the S&P 500 sectors shows the information technology sector (+2.0%) way in the lead with a 2% gain, while the energy (-3.8%), financials (-3.2%), and industrials (-1.9%) sectors flounder in negative territory.

WTI crude futures settled today's session higher by $0.62 (+1.6%) to $39.54/bbl.