Stocks End Mixed, Nasdaq Closes Near Record Highs
4:23 pm Thursday, June 17th, 2021
Conviction in the strength of the economic recovery convinced investors into U.S. technology stocks on Thursday, driving the Nasdaq higher, although a post-Fed hangover limited a subdued S&P.
The current indication has transpired in intraday action based off the price action in the Treasury market and commodities markets, which were supporting the peak inflation rate narrative and, in turn, the view that growth rates are peaking.
The 10-yr yield, which was essentially unchanged at the open (9:30 a.m. ET), now finds itself down 11 basis points at 1.46%, or below pre-FOMC levels yesterday. In addition, WTI crude futures are down 3.0% to $69.97/bbl, copper futures are down 4.8% to $4.18/lb, and gold futures are down 4.8% to $1771.90/ozt.
Accordingly, the S&P 500 energy (-3.7%), financials (-2.9%), materials (-2.8%), and industrials (-2.0%) sectors are down sharply between 2-4%. Conversely, the retracement in the 10-yr yield has greatly benefited the information technology (+0.7%) and utilities (+0.7%) sectors.
The market, which was slightly confused and shaken up yesterday post-FOMC, appears to have regathered its wits and is back on its pre-FOMC track. In other words, prior to today, commodities, ex oil, were already pulling back from recent highs and the 10-yr yield had previously broken below a 3-month consolidation trend.
Yesterday, the Fed remained committed to the view that the recent rise in inflation was largely due to transitory factors, and Fed Chair Powell reminded market participants to not take its interest-rate projections as gospel. Granted, the fed-sensitive 2-yr yield is holding firm at its unchanged mark at 0.21%.
What’s more, an unexpected 37,000-increase in weekly initial claims to 412,000 (consensus 350,000) is being interpreted as a reason for the Fed to stay highly accommodative and continue to closely watch upcoming economic data.
Separately, NVIDIA (NVDA) is rallying to fresh record highs after its price target was increased a Street-high $854 from $740 at Jefferies. Danaher (DHR) agreed to acquire privately-held Aldevron for $9.6 billion in cash.
