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Market Snapshot

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

Dow 34421.93 -259.86 (-0.75%)
Nasdaq 14559.79 -105.28 (-0.72%)
SP 500 4320.82 -37.31 (-0.86%)
10-yr Note +24/32 1.297
NYSE Adv 778 Dec 2432 Vol 972.1 mln
Nasdaq Adv 1430 Dec 2571 Vol 4.5 bln

Industry Watch
Strong: Consumer Discretionary
Weak: Financials, Materials, Industrials

Moving the Market

-- General de-risking and profit-taking efforts

-- Reported growth concerns fueled in part after Japan extended state of emergency through the Olympics

-- 10-yr yield touched 1.25% early in the morning

Investors take profits as headlines fuel peak growth narrative
08-Jul-21 16:20 ET
Dow -259.86 at 34421.93, Nasdaq -105.28 at 14559.79, S&P -37.31 at 4320.82

[BRIEFING.COM] The S&P 500 (-0.9%) and Nasdaq Composite (-0.7%) pulled back from record territory on Thursday, as investors mainly took profits amid pestering peak growth concerns. The Dow Jones Industrial Average declined 0.8% while the Russell 2000 declined 0.9% after it led the major indices lower with a 2.7% intraday decline.

The negative bias was formed overnight, reportedly because Japan extended its coronavirus state of emergency through Aug. 22 (it later confirmed that spectators will be banned at the Olympics), the People's Bank of China signaled it will cut the required reserve ratio for banks, and the 10-yr yield traded as low as 1.25%.

These developments harked on the oft-repeated narrative that growth rates are apt to slow down, partially because the Delta variant is hurting foreign economies and could further strain parts of the labor market. On a related note, weekly initial claims were higher than expected at 373,000 (Briefing.com consensus 350,000).

My midday, though, the Russell 2000 had returned to its flat line, the large-cap indices had recouped more than half of their losses, and the 10-yr yield nearly returned to its unchanged mark. This comeback effort unfortunately fell short, feeding into the narrative that the market was running on tired legs and due for a pullback.

All 11 S&P 500 sectors closed lower, led by the cyclical financials (-2.0%), industrials (-1.4%), and materials (-1.4%) sectors. The consumer discretionary sector (-0.1%) declined just 0.1% due to strength in Amazon.com (AMZN 3731.41, +34.83, +0.9%) and Tesla (TSLA 652.81, +8.16, +1.3%). Growth stocks in general were weak, though.

Interestingly, oil prices ($72.98/bbl, +0.80, +1.1%) did stage a successful comeback, rising 1% after being down 1.9% intraday. The turnaround was aided by data showing the seventh-straight weekly inventory draw out of the EIA.

The 10-yr yield and 2-yr yield both settled lower by three basis points to 1.29% and 0.19%, respectively. The U.S. Dollar Index decreased 0.3% to 92.37.

All in all, the growth-oriented headlines and the unnerving decline in the 10-yr yield presumably made it hard to justify another positive day. With growth/inflation rates in mind, the market will surely be paying attention to the China CPI and PPI data for June and the industrial production reports for the UK, Italy, and France tomorrow.

Reviewing Thursday's economic data:

For the week ending July 3, initial claims increased 2,000 to 373,000 (Briefing.com consensus 350,000). Continuing claims for the week ending June 26 decreased by 145,000 to 3.339 million -- the lowest since March 21, 2020.
The key takeaway from the report is in the recognition that the four-week moving average for initial claims (394,500) is at its lowest level since March 14, 2020. That's still too high, yet the trend remains encouraging.
Consumer credit increased by $35.3 bln in May (Briefing.com consensus $19.0B) after increasing an upwardly revised $20.0 bln (from $18.6 bln) in April. The key takeaway from the report is that the expansion in consumer credit in May was the largest since December 2010.

Looking ahead, investors will receive Wholesale Inventories for May on Friday.

S&P 500 +15.0% YTD
Russell 2000 +13.0% YTD
Nasdaq Composite +13.0% YTD
Dow Jones Industrial Average +12.5% YTD

Crude futures rise on seventh-straight inventory draw
08-Jul-21 15:30 ET
Dow -347.66 at 34334.13, Nasdaq -117.49 at 14547.58, S&P -42.83 at 4315.30

[BRIEFING.COM] The S&P 500 is down 1.0% amid losses in all 11 of its sectors.

The financials sector remains the weakest link with a 2.1% decline amid the lower Treasury yields, while the consumer discretionary sector is down just 0.1% due to strength in Amazon.com (AMZN 3736.68, +40.23, +1.1%). Amazon is breaking out to fresh all-time highs.

WTI crude futures settled higher by 1.1%, or $0.80, to $72.98/bbl. The EIA reported its seventh straight weekly inventory draw, and of course, it was larger than expected.