Despite the major indexes rising through most of the session, the final session of the week saw a lack of conviction on either side of the trade. Today’s moves were driven by an underlying negative bias.
In market trends, decliners outnumbered decliners by nearly 3 to 1 on the New York Stock Exchange and 8 to 3 on the Nasdaq.
The downside bias was a reaction to the sharp rise in market interest rates. The 10-year Treasury yield rose 15 basis points today and is down 8 basis points this week to 4.43%. The 2-year Treasury yield rose 15 basis points today and is down 2 basis points this week to 4.87%.
The price movement in Treasuries came on the heels of the May employment report, which showed better-than-expected payroll and earnings growth.
Stocks held firm despite the report and the surge in market interest rates thanks to their continued resistance to selling pressure. The equally-weighted S&P 500 closed down 0.3%, while the market-cap-weighted S&P 500 closed down 0.1%.
Four S&P 500 sectors closed higher, led by Financials (+0.4%) and Information Technology (+0.2%), while Utilities (-1.1%) and Materials (-1.0%) posted the biggest declines.
In other news, GameStop Corp. (GME) shares fell 36.0% to 29.31 after the company reported disappointing first quarter earnings and filed to sell up to 75 million shares of its Class A common stock. Selling surged after the company’s “Roaring Kitty” livestream on YouTube today.
- Nasdaq Composite Index: +14.1% YTD
- S&P 500: +12.1% YTD
- S&P Midcap 400: +5.0% YTD
- Dow Jones Industrial Average: +2.9% YTD
- Russell 2000: UNCH YTD
Check out today’s economic data:
- May Nonfarm Payrolls: 272K (consensus 185K); last revised from 175K to 165K
- May Nonfarm Private Payrolls: 229K (consensus 168K); previously revised 167K to 158K
- May average hourly wage: 0.4% (consensus 0.3%), previous 0.2%
- May Unemployment Rate: 4.0% (consensus 3.9%), previous 3.9%
- Average hours worked in May: 34.3 (consensus 34.3), previous 34.3
- Wholesale inventories April: 0.1% (consensus 0.2%); previously revised to -0.5% from -0.4%
The key takeaway from this report was the knee-jerk sell-off in the Treasury market, suggesting that the Fed’s inflation concerns are unlikely to be assuaged by this announcement.
Looking ahead, no significant U.S. economic data is scheduled to be released on Monday.
Today’s News
Nvidia (NVDA, Financials) formally announced a 10-for-1 stock split that will take effect June 7. Split-adjusted trading will begin June 10. The move comes on the heels of Nvidia’s strong first-quarter results, strengthening investor confidence in the tech giant. Nvidia shares closed down 0.1% at $1,208.88 on Friday.
Keith Gill, also known as Roaring Kitty, returned to YouTube for the first time in three years with a livestream. The event coincided with GameStop (GME, Financial) reporting its first-quarter earnings and revealing plans to sell up to 75 million shares. Gill acknowledged the risks, but expressed continued confidence in GameStop’s ability to restructure under Ryan Cohen’s leadership.
Google (GOOG, GOOGL) will avoid a jury trial in an antitrust lawsuit brought by the U.S. Department of Justice over its monopoly on digital advertising by agreeing to pay $2.3 million to cover the federal government’s damage claims, which will allow the case to be heard in person by a judge. The case is scheduled to begin on September 9th.
Bank of America highlighted the huge impact that Nvidia (NVDA, Finance) and AI investment trends have had on the S&P 500. Excluding Nvidia shares, the S&P 500’s year-to-date gains shrink to 7.9%. Nvidia shares have surged about 140% year-to-date, valuing the company at more than $3 trillion.
Warner Bros. Discovery (WBD, Finance) has acquired the rights to the French Open tennis tournament, which previously aired on Comcast’s NBC Sports. The deal allows Warner Bros. to broadcast the tournament on its own television networks, Max streaming service and Bleacher Report properties. Financial terms were not disclosed.
Exxon Mobil (XOM, Financials) received a downgrade from buy to hold from Truist Securities, which lowered its price target to $124 from $146. Truist noted concerns that Exxon’s free cash flow yield will lag far behind peers through 2025, despite positive assets such as Guyana and the recent acquisition of Pioneer Natural Resources.
Walgreens Boots (WBA, Finance) has suspended plans for an initial public offering for its Boots drugstore chain in the U.K. as the company explores other options, including potential bidders. Walgreens is conducting a strategic review to consider all options and enhance long-term shareholder value.
International Paper (IP, Financial) could be valued at $54 to $57 per share in a potential acquisition by Suzano (SUZ), which is reportedly seeking to raise up to $19 billion in debt to fund the acquisition. Nonetheless, Jefferies analyst Philip Ng said IP’s board may be viewing the intrinsic value as significantly higher.
Companies with ex-dividend dates next week include Nvidia (NVDA, Financials) and Alphabet (GOOGL, GOOG). This follows a series of dividend increases and dividend declarations last week by companies such as Welltower (WELL, Financials) and Essential Properties (EPRT, Financials).
