Stocks End Mixed: Nasdaq Outperforms
4:04 pm Tuesday, July 05th, 2022
Stocks end mixed Tuesday after early slump, extending a slump for the major indexes as investors continue to worry about the state of the economy.
The biggest loser has been the energy sector (-5.8%). It is getting clobbered today along with energy futures. WTI crude was down 8.9% to $98.77/bbl, natural gas futures are down 4.8% to $5.44/mmbtu, and unleaded gasoline futures are down 8.3% to $3.38/gal.
That selling reflects an outlook for weakening demand, but it also reflects some unwinding of crowded positions in what has often been a winning trade this year.
The pullback in energy prices has helped boost a number of consumer discretionary stocks, which are exhibiting relative strength in today’s market. The S&P 500 consumer discretionary sector (+0.5%), paced by leadership from Amazon.com (AMZN), has been a standout, bouncing back from an earlier 2.2% decline.
In general, the mega-cap stocks have played an important support role today. They have exhibited relative strength since the open. The Vanguard Mega-Cap Growth ETF (MG) is unchanged versus a 1.5% decline for the S&P 500 and a 1.5% decline for the Invesco S&P 500 Equal Weight ETF (RSP).
Another focal point today has been the Treasury market and the flat yield curve. The 2-yr note yield is down four basis points to 2.79% while the 10-yr note yield is down 10 basis points to 2.79%. The 3-yr note and 5-yr note yields are also at 2.79%.
The flat curve is being identified as a harbinger of a much weaker economic climate, although the drop in long-term rates has been held out by some as a support factor that has enabled the market to cut its opening losses.
