Sector Investing

[ReturntoSender]

Market Snapshot

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

Dow 34756.39 +179.35 (0.52%)
Nasdaq 13814.49 +199.98 (1.47%)
SP 500 4229.89 +37.04 (0.88%)
10-yr Note +20/32 1.560
NYSE Adv 2052 Dec 1185 Vol 801.9 mln
Nasdaq Adv 2471 Dec 1683 Vol 4.32 bln

Industry Watch
Strong: Technology, Health Care, Consumer Discretionary, Communication Services
Weak: Financials, Energy, Materials, Real Estate

Moving the Market

Nasdaq outperforms after weak showing on Thursday

May Employment Situation report misses headline expectations while unemployment rate decreases more than expected

Growth Stocks Return to Form
04-Jun-21 16:15 ET
Dow +179.35 at 34756.39, Nasdaq +199.98 at 13814.49, S&P +37.04 at 4229.89

[BRIEFING.COM] The stock market finished the week on a strong note as the Nasdaq (+1.5%) paced a daylong rally while the S&P 500 (+0.9%) and Dow (+0.5%) followed. The Dow and S&P 500 gained a respective 0.7% and 0.6% for the week while the Nasdaq advanced 0.5%.

Equities jumped out of the gate after the May jobs report showed continued growth in employment but at a pace that was not strong enough to prompt calls for an imminent tightening of monetary policy. The market followed its firmly higher start with a slow upward drift that continued into the afternoon.

Sectors that underperformed yesterday were at the forefront of today's rally with technology (+1.9%; +1.2% for the week) and communication services (+1.4%; +0.6% for the week) turning positive for the week while the consumer discretionary sector (+0.8%; -1.0% for the week) ended among today's leaders, but still finished the week behind most of the remaining groups.

The technology sector benefited from renewed strength in top components like Apple (AAPL 125.89, +2.35, +1.9%) and Microsoft (MSFT 250.79, +5.08, +2.1%) while chipmakers also pulled their weight with NVIDIA (NVDA 703.13, +24.34, +3.6%) spiking to a fresh record and the PHLX Semiconductor Index jumping 2.4%. Broadcom (AVGO 475.00, +10.20, +2.2%) revisited this week's high after beating Q2 expectations and issuing above-consensus revenue guidance for Q3.

Mega cap names also contributed to the strength in the communication services sector, showing no concern for indications that the G-7 is close to agreeing to a global minimum corporate tax rate of 15.0%. Alphabet (GOOG 2451.76, +47.15, +2.0%) hit a fresh record before trimming its gain.

The discretionary sector received significant support from Tesla (TSLA 599.05, +26.21, +4.6%) as the stock bounced off a two-week low amid a pushback to yesterday's report about a sharp slowdown in sales in China. Retailers underperformed with the SPDR S&P Retail ETF (XRT 94.01, -0.20, -0.2%) ticking lower but lululemon (LULU 329.52, +12.16, +3.8%) jumped almost 4.0% after beating Q1 expectations and issuing above-consensus guidance for the fiscal year.

Several sectors started the day in negative territory, but most were pulled higher during the daylong climb. The energy sector (+0.6%) showed some early weakness after gaining 6.0% over the past three days, but eventually turned positive, extending this week's gain to 6.7%. The growth-sensitive group received continued support from the price of oil, which rose $0.80, or 1.2%, to $69.61/bbl.

Treasuries finished the day on their highs with the 10-yr yield falling seven basis points to 1.56%. The benchmark yield slipped two basis points for the week, stopping just above last week's low.

Today's economic data was limited to the Employment Situation report and Factory Orders:

May nonfarm payrolls increased by 559,000 (Briefing.com consensus 720,000). The 3-month average for total nonfarm payrolls increased to 541,000 from 533,000 in April.
April nonfarm payrolls revised to 278,000 from 266,000. March nonfarm payrolls revised to 785,000 from 770,000
May private sector payrolls increased by 492,000 (Briefing.com consensus 650,000). April private sector payrolls revised to 219,000 from 218,000 March private sector payrolls revised to 724,000 from 708,000
May unemployment rate was 5.8% (Briefing.com consensus 5.9%), versus 6.1% in April
Persons unemployed for 27 weeks or more accounted for 40.9% of the unemployed versus 43.0% in April
The U6 unemployment rate, which accounts for unemployed and underemployed workers, was 10.2%, versus 10.4% in April
May average hourly earnings increased 0.5% (Briefing.com consensus 0.2%) versus a 0.7% increase in April. Over the last 12 months, average hourly earnings have risen 2.0%, versus 0.4% for the 12 months ending in April
The average workweek in May was 34.9 hours (Briefing.com consensus 34.9), versus a downwardly revised 34.9 hours (from 35.0) in April. The labor force participation rate was 61.6%, versus 61.7% in April
Factory orders for manufactured goods decreased 0.6% m/m in April (Briefing.com consensus 0.5%) after increasing an upwardly revised 1.4% (from 1.1%) in March. Shipments of manufactured goods were up 0.4% after increasing 2.1% in March.
The key takeaway from the report is that, while there was a downturn in new orders for manufactured goods, that downturn followed eleven consecutive monthly increases, suggesting there was some normal slowing after a long streak of increases in orders for manufactured goods. Importantly, new orders for nondefense capital goods, excluding aircraft -- a proxy for business spending -- remained strong, rising 2.2%.

Monday's data will be limited to the 15:00 ET release of the Consumer Credit report for April (Briefing.com consensus $22.00 bln).

Russell 2000 +15.8% YTD
Dow Jones Industrial Average +13.6% YTD
S&P 500 +12.6% YTD
Nasdaq Composite +7.2% YTD