Stock Market News for Jul 7, 2021

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Wall Street closed mixed on Tuesday following moderate economic data and flip flop in oil prices. Investors’ remained concerned whether the U.S. economy has reached the peak of the recovery from last year’s coronavorus-led devastations. The S&P 500 and the Dow retreated from their high levels, while the Nasdaq Composite recorded a new all-time high.

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How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was down 0.6% or 208.98 points to close at 34,577.37. Notably, 22 components of the 30-stock index ended in the red while 8 in green.

The S&P 500 fell 0.2% to end at 4,343.54, terminating seven consecutive days of winning streak. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF), the Materials Select Sector SPDR (XLB) and the Industrials Select Sector SPDR (XLI) tumbled 3.3%, 1.6%, 1.5% and 1%, respectively. Notably, seven out of eleven sectors of the benchmark index closed in the red while four in green.

Meanwhile, the tech-heavy Nasdaq Composite finished at 14,663.64, rising 0.2% due to strong performance by large-cap technology stocks. The teach-laden index registered a new closing high after Jul 2. In intraday trading, the index recorded a fresh all-time high of 14,687.

The fear-gauge CBOE Volatility Index (VIX) was up 9.1% to 16.44, its highest close in two weeks. A total of 10.12 billion shares were traded on Tuesday, lower than the last 20-session average of 10.8 billion. Decliners outnumbered advancers on the NYSE by a 1.86-to-1 ratio. On Nasdaq, a 2.18-to-1 ratio favored declining issues.

Moderate Economic Data

The Institute of Supply Management (ISM) reported that services purchasing managers’ (PMI) index fell to 60.1% in June from a record-high 64% in May. The consensus estimate was 63.3%. Likewise, the final reading of the IHS Markit services PMI for June decreased to 64.6% from 70.4% in May. Notably, any reading above 50 means expansion of services sector  and a reading above 60 means exponential expansion.

The demand remained very strong for services sector as all 16 services industries reported growth in June. The June reading indicates the thirteen consecutive month of growth for the services sector.

However, supply-side disruptions like shortage of manpower and the problem of getting critical supplies on time and at a reasonable price were major hurdles. In fact, the employment sub-index declined to 49.3% in June from 55.3% in May, marking its first contraction in 2021.

Moreover, prices of government bonds surged buoyed by strong demand. Consequently, the yield on the benchmark 10-Year U.S. Treasury Note dropped 6.5 basis points to settle at 1.369%, the largest one-day decline since Jun 4 and its lowest since Feb 24. Market participants’ remained concerned that low yield may indicate that the U.S. economy likely reached the peak of recovery and growth may slow down in the near future.

Falling yield is a boon for growth stocks like technology and a bane for financial stocks like bank. Shares of Apple Inc. AAPL and Alphabet Inc. GOOGL gained 1.5% and 0.7%, respectively while shares of The Goldman Sachs Group Inc. GS and JPMorgan Chase & Co. JPM dropped 1.2% and 1.7%, respectively. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Crude Oil Prices Flip Flop

The Organization of Petroleum Exporting Countries and its allies failed to reach an agreement on production quota for August and beyond and have postponed their meeting for an indefinite time period. Consequently, the price of U.S. oil benchmark the West Texas Intermediate touched $76.98, its highest since November 2014. However, it closed at $73.37, falling 2.38% or $1.79. As a result, shares of global oil giants like Exxon Mobil Corp. XOM and Chevron Corp. CVX tanked 2.9% and 2%, respectively.

Stocks That Have Made Headline

Knight-Swift Buys LTL Carrier AAA Cooper for $1.35B

Knight-Swift Transportation Holdings KNX has acquired Dothan, AL-based less-than-truckload (“LTL”) carrier AAA Cooper Transportation for an enterprise value of $1.35 billion. (Read More)

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