Stocks See Modest Jump On Inflation Worries
2:44 pm Monday, June 06th, 2022
A modest recovery in solar stocks accelerated Monday on expectations surrounding President Joe Biden’s executive action prohibiting any additional tariffs on solar panel imports for two years.
A good chunk of last week’s losses were taken back initially, as the Dow, Nasdaq, and S&P 500 gained as much as 1.0%, 1.9%, and 1.5%, respectively, shortly after the start of trading.
A 4.4% gain in Tesla (TSLA), after Elon Musk softened his view of Tesla’s futures employment plans, a 2.2% gain in Apple (AAPL), ahead of its Worldwide Developers Conference, and a 5.4% jump in Amazon.com (AMZN), as its 20-for-1 stock split went into effect today, were instrumental in driving the broader market higher.
The buying enthusiasm faded away mid-morning, however, as investors sold into that strength without a specific news catalyst. The Vanguard Mega-Cap Growth ETF (MGK), up as much as 2.1%, is now up 0.4%.
Instead, other factors entered the mix as selling catalysts.
Specifically, the 10-yr note yield moved back above 3.00% (currently up seven basis points to 3.02%) and natural gas futures heated up (currently up 9.3% to $9.32/mmbtu).
The latter has taken some of the spotlight off oil prices, but not all of it. WTI crude futures pushed above $120.00/bbl before the open amid reports that Saudi Arabia is raising prices for Asian buyers because of strong demand, but that move got stymied. WTI crude futures are currently down 0.1% at $118.75/bbl.
While oil futures have pulled back some, the overarching point is that energy costs remain painfully high for end users. That reality has stoked concerns that inflation rates will be slow to come down, that growth will slow as consumers curtail their discretionary spending activity in coming months, and that the Fed will stay in an aggressive rate-hike posture longer than most would like.
Nine out of 11 S&P 500 sectors remain in positive territory, although only one sector — consumer discretionary (+1.0%) — is up at least 1.0%. The two sectors in negative territory are real estate (-0.4%) and consumer staples (-0.03%).
An advance-decline line that favored advancers by a 4-to-1 margin earlier at the NYSE has been whittled away to a 17-to-14 margin. Meanwhile, decliners lead advancers at the Nasdaq by a slim margin after advancers topped decliners earlier by a 3-to-1 margin.
There was no economic data of note out of the U.S. today.
