Stocks traded mixed on Wednesday as investors considered more mixed data on the U.S. economic recovery and a resurgence in the social media-fueled “meme stocks.”
The S&P 500 ticked higher, coming within points of its all-time high, with traders searching for new catalysts to send the broader market higher. The Dow hugged the flat line, while the Nasdaq advanced. Worries over heightened inflation lingered, and concerns over supply-side shortages were fanned further after new data on Tuesday showed job openings and the voluntary quit rate each surged to a record high in April.
“The labor markets are still struggling to get out of first gear as it relates to the supply of the workforce,” ManpowerGroup CEO Jonas Prising told Yahoo Finance. “There are childcare concerns, there are still lingering healthcare concerns, and then there are support mechanisms that are clearly also enabling people to stay home … I think those three factors are going to ease in importance in the coming months.”
Meanwhile, meme stocks got another boost Wednesday, with the social media-fueled rally extending to new stocks including fast food chain Wendy’s (WEN), e-commerce company Wish (WISH) health firm Clover Health (CLOV). Shares of AMC Entertainment (AMC), which has more than doubled so far in June, gave back some gains Wednesday morning as online traders pivoted to new targets.
“It’s a sign that people have a bit more free time than they’re used to having, and that cash flow is good and people feel very confident,” Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told Yahoo Finance of the renewed interest in the meme stocks this month. “Usually when we go through a downturn, people don’t have this kind of confidence this early in the recovery about their jobs, about their wealth to take these kind of risks.”
GameStop (GME), the original poster child of the Reddit-fueled trading frenzy, is poised to report first-quarter earnings results on Wednesday. The company is expected to report a fourth loss in five quarters, though quarterly revenue likely grew on a year-over-year basis for the first time in nearly three years. Shares were little changed during the pre-market session.
But as for the broader market, Kleintop added he believes the cyclical and value rotation seen so far this year still has room to run, and that certain international equities may have more upside in the near term relative to U.S. stocks. So far in June, the cyclical energy sector has outperformed in the S&P 500 with a gain of 7% for the month-to-date. And small cap stocks, which tend to lead during recoveries, have outperformed large caps, with the Russell 2000 up 3.3% versus the S&P 500’s 0.6% gain through Tuesday’s close.
“I think you still have to stick with the recovery stocks. I know we’ve seen a lot more momentum to areas like financials and energy that are tied to the rise in inflation,” he said. “But there are a lot of cyclically-oriented companies that aren’t. Industrials, for example, continue to do very well in this environment. And I think that’s the rotation we’re looking for.”
“I’d note that Europe hasn’t peaked yet in terms of its growth momentum,” Kleintop added. “The U.S. probably has here this quarter. China did late last year. So we’ve still got the peak here in terms of momentum for growth for Europe coming later this year. I think that’s where you want to focus.”
9:31 a.m. ET: Stocks open mixed, Treasury yields sink
Video: Morning Brief: Retail and crypto are dominating the market (Yahoo! Finance)
The three major indexes were mixed Wednesday morning as traders sought new catalysts for risk assets. The S&P 500 opened higher by about 0.2%, bringing it within 1 point of its record high. The Dow was roughly unchanged, while the Nasdaq outperformed with a rise of 0.5% as technology stocks advanced.
Treasury yields were lower across the curve as concerns over higher rates moderated somewhat among investors. The benchmark 10-year yield slid by more than 5 basis points to below 1.5%, bringing its one-month decline to about 20 basis points.
7:13 a.m. ET Wednesday: Stock futures trade mixed
Here’s where markets were trading Wednesday morning:
S&P 500 futures (ES=F): 4,229.50, +3.75 points (+0.09%)
Dow futures (YM=F): 34,570.00, -16 points (-0.05%)
Nasdaq futures (NQ=F): 13,850.75, +39.25 points (+0.28%)
Crude (CL=F): +$0.25 (+0.36%) to $70.30 a barrel
Gold (GC=F): -$2.80 (-0.15%) to $1,891.60 per ounce
10-year Treasury (^TNX): -2.2 bps to yield 1.506%
6:20 p.m. ET Tuesday: Stock futures trade flat
Here’s where markets were trading Tuesday evening:
S&P 500 futures (ES=F): 4,224.5, -1.25 points (-0.03%)
Dow futures (YM=F): 34,581.00, -5 points (-0.01%)
Nasdaq futures (NQ=F): 13,811.00, -0.5 points, or roughly unchanged
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: