Stocks End Mixed, Tech Stocks Under Pressure
4:12 pm Thursday, June 03rd, 2021
The major averages closed lower with Nasdaq leading the downtrend as investors studied data indicating an uptick in job growth for cues on the trajectory of economic recovery and inflation.
The trading day started on a broadly lower note after equity futures retreated alongside international markets in overnight trade. The opening downdraft sent the S&P 500 back to last week’s low, but a rebound took shape in short order, allowing the benchmark index to return to its starting level.
The bounce received a boost after it was reported that the Biden administration is changing its tone on corporate taxation and is open to implementing a minimum rate of 15% instead of raising the top corporate rate to 28% from 21%. On a related note, the administration expects to continue infrastructure negotiations with Republicans through tomorrow.
Five out of eleven sectors remain in the red with technology (-0.6%) weighing on the broader market. The influential sector trades only ahead of the communication services sector (-0.8%) and just behind the consumer discretionary space (-0.5%). The weakness in technology is due in part to a poor showing from large components like Apple (AAPL), Microsoft (MSFT), MasterCard (MA), and Intel (INTC) while chipmakers also lag. The PHLX Semiconductor Index is down 1.2%.
Like technology, the discretionary sector owes some of its weakness to losses in large names like Amazon (AMZN) and McDonald’s (MCD).
U.S. Treasuries had a down day, which led to higher yields across the curve. The move was catalyzed predominately by a wave of stronger than expected economic data that prompted market participants to re-think the timing of when they think the Fed might re-think the timing of a decision to pull back some of its accommodation.
Initial claims for the week ending May 29 decreased by 20,000 to 385,000 (Briefing.com consensus 395,000). Continuing claims for the week ending May 22 increased by 169,000 to 3.771 million.
The ADP Employment Change report pointed to the addition of 978,000 private-sector payrolls in May (consensus 675,000) after a downwardly revised increase of 654,000 (from 742,000) in April.
The ISM Non-Manufacturing Index for May increased to 64.0% (Briefing.com consensus 63.0%) from 62.7% in April. The dividing line between expansion and contraction is 50.0%. The May reading marks the twelfth straight month of growth for the services sector and is a record high for this series.
