Stocks End With Solid Rebound After Early Losses
1:24 pm Friday, July 01st, 2022
Wall Street edged higher in light trading on Friday as investors embarked on the second half of the year.
Micron (MU) issued fiscal Q4 revenue and EPS guidance well below consensus estimates, citing a weakened demand environment for smartphones and PCs.
General Motors (GM) reduced its Q2 net income expectations — but left its full-year guidance unchanged — citing supply chain disruptions that adversely impacted wholesale volumes in Q2.
The eurozone had a record-high inflation rate (8.6% yr/yr) in June.
The June ISM Manufacturing PMI saw its lowest reading since June 2020 (53.0%) and the first contraction in new orders activity in 25 months.
These factors have not led to significant selling interest as evidenced by the advance-decline line. Advancers lead decliners at the NYSE by an 11-to-10 margin while decliners lead advancers by the same spread at the Nasdaq.
Treasury yields fell sharply around the time that the ISM Manufacturing Index was released but have since come off those levels. The 2-yr note yield is down 13 basis points to 2.79%, compared to 2.75% earlier. The 10-yr note yield is down ten basis points to 2.88%, compared to 2.80% earlier.
One area of particular weakness is semiconductors after the Micron news this morning. The PHLX Semiconductor Index is down 4.5% with many components falling to new 52-week lows, including Micron. Other stocks that reached new lows include NVIDIA (NVDA), Intel (INTC), and Advanced Micro Devices (AMD).
The S&P 500 sectors are seeing mixed price action today as well. The best performers are the utilities (+1.4%), consumer discretionary (+0.8%), and real estate (+0.5%) sectors. The top laggards are the information technology (-0.8%), communication services (-0.6%), and health care (-0.3%) sectors. The utilities sector (+1.4%) is the only group with a gain of more than 0.6%, as it benefits from its countercyclical nature amid growth concerns in the broader market. The sector has gained 3.0% this week while the remaining ten sectors are down for the week.
The June ISM Manufacturing Index decreased to 53.0% (consensus 55.0%) from 56.1% in May. A number above 50.0% is indicative of expansion. June marked the 25th consecutive month of expansion in the manufacturing sector, although the June reading was the lowest reading since June 2020.
