Stocks Rebound on Strength in Banks and Managed Healthcare

The S&P 500 Index ($SPX) (SPY) on Thursday closed up +0.41%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +1.73%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.53%.  June E-mini S&P futures (ESM26) rose +0.36%, and June E-mini Nasdaq futures (NQM26) fell -0.47%.

Stock indexes settled mixed on Thursday, with the Dow Jones industrials posting a new all-time high.  The overall market shook off early weakness on Thursday and pushed higher as a -3% plunge in crude oil prices knocked T-note yields lower, with the 10-year T-note yield falling -2 bp to 4.47%.  Also, the rally in bank stocks and managed healthcare companies lifted the broader market, pushing the Dow Jones Industrial Average to a new record high.

The weakness in technology stocks on Thursday weighed on the broader market, keeping the Nasdaq 100 in negative territory.  Broadcom fell more than -12% to lead chipmakers lower after its forecast for artificial-intelligence revenue in the current quarter fell short of expectations.  Also, CrowdStrike Holdings closed down more than -3% to lead cybersecurity stocks lower, despite reporting better-than-expected Q1 earnings, as the report wasn’t strong enough to lift the stock, which has more than doubled from a March low. 

Weaker crude oil prices are a positive factor for stocks and bonds, as WTI crude oil fell more than -3% on Thursday after the US late Wednesday said Israel and Lebanon agreed to a ceasefire if Hezbollah also stops fighting and withdraws militants from areas near the border with Israel.  Iran insists a peace deal with the US requires a ceasefire in Lebanon.  The agreement would require the Lebanese army to take over after the withdrawal of Israeli troops.  However, Hezbollah militants said they refused to abide by the conditions of the ceasefire announced by the US State Department, and clashes continued in southern Lebanon.  Iranian Foreign Minister Abbas Araghchi said that “Communications between Iran and the US have not been cut off, but no tangible progress has been achieved in the negotiating process.”

Thursday’s US economic news was mixed for stocks after weekly jobless claims rose more than expected to a 3.75-month high and Q1 nonfarm productivity was revised lower.  Conversely, Q1 unit labor costs were unexpectedly revised lower, easing concerns over wage pressures. 

US weekly initial unemployment claims rose +13,000 to a 3.75-month high of 225,000, showing a weaker labor market than expectations of 215,000.

US Q1 nonfarm productivity was revised downward to 0.3% from the previously reported 0.8%, weaker than expectations of 0.4%.  Q1 unit labor costs were unexpectedly revised downward to 1.8% from 2.3%, weaker than expectations of an upward revision to 2.4%.

The markets are discounting a 2% chance of a +25 bp rate hike at the next FOMC meeting on June 16-17.

The generally favorable Q1 earnings season is winding down.  As of Thursday, 83% of the 494 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets settled mixed on Thursday.  The Euro Stoxx 50 closed up +0.82%.  China's Shanghai Composite closed down -0.64%. Japan's Nikkei Stock Average closed down -1.36%.

Interest Rates

September 10-year T-notes (ZNU6) on Thursday closed up +4.5 ticks, and the 10-year T-note yield fell -2.4 bp to 4.471%.  T-note prices moved higher on Thursday, supported by a -3% decline in WTI crude oil prices, which has lowered inflation expectations.  The 10-year breakeven inflation rate fell to a 6-week low of 2.365% on Thursday.  Fed-friendly US economic news was also positive for T-notes, following weekly jobless claims that rose more than expected and Q1 unit labor costs that were unexpectedly revised lower.  T-notes fell back from their best level as stocks rebounded, dampening safe-haven demand for government debt securities.

European government bond yields moved lower on Thursday.  The 10-year German Bund yield fell from a 1.5-week high of 3.043% and finished down -1.3 bp to 3.023%.  The 10-year UK gilt yield fell -3.3 bp to 4.898%.

Eurozone Apr retail sales fell -0.4% m/m, weaker than expectations of -0.3% m/m.

Swaps are discounting a 98% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Humana (HUM) closed up more than +6% to lead managed healthcare stocks higher and gainers in the S&P 500 after Morgan Stanley raised its price target on the stock to $240 from $217.  Also, Centene (CNC) closed up more than +5%, and UnitedHealth Group (UNH) closed up more than +5% to lead gainers in the Dow Jones Industrials after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $450.  In addition, Elevance Health (ELV) and Molina Healthcare(MOH) closed up more than +4%, and Cigna Group (CI) and CVS Health (CVS) closed up more than +3%.  Finally, Cardinal Health (CAH) closed up more than +2%.

Asset managers and bank stocks rallied on Thursday, lifting the broader market.  Blackstone (BX) closed up more than +7% to lead gainers in the S&P 500, and Franklin Resources (BEN) closed up more than +5%.  Also, Goldman Sachs (GS), Fifth Third Bank (FITB), and US Bancorp (USB) closed up more than +4%.  In addition, JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C), Wells Fargo (WFC), Citizens Financial Group (CFG), M&T Bank (MTB), and BlackRock (BLK) closed up more than +3%.

Chipmakers and AI-infrastructure stocks retreated on Thursday, led by a -12% plunge in Broadcom (AVGO), the largest decliner in the Nasdaq 100, after giving an outlook that was seen as underwhelming, given the industry’s AI-related demand.  Also, Micron Technology (MU) closed down more than -7%, and ARM Holdings Plc (ARM) closed down more than -4%.  In addition, Advanced Micro Devices (AMD), Qualcomm (QCOM), Sandisk (SNDK), and Western Digital (WDC) closed down more than -3%, and Lam Research (LRCX) and Analog Devices (ADI) closed down more than -2%. 

Medtronic Plc (MDT) closed up more than +5% after BTIG LLC upgraded the stock to buy from neutral with a price target of $90.

RTX Corp (RTX) closed up +4% after Jeffries upgraded the stock to buy from hold with a price target of $220. 

Alnylam Pharmaceuticals (ALNY) closed up more than +3% to lead gainers in the Nasdaq 100 after entering into a strategic AI collaboration with Inceptive Nucleics valued at up to $2 billion to accelerate the discovery and design of RNAi therapeutics. 

Brown-Forman (BF.B) closed up more than +2% after reporting Q4 gross margin of 62.6%, stronger than the consensus of 57.5%.

Zoetis (ZTS) closed up more than +2% after KeyBanc Capital Markets said the cattle screwworm parasite could be a potential catalyst for the company’s livestock portfolios, as it has approved medications to prevent and treat the parasite in livestock.

PVH Corp (PVH) closed down more than -20% after forecasting 2027 adjusted EPS of $11.80 to $12.10, weaker than the consensus of $12.24. 

Ciena Corp (CIEN) closed down more than -13% to lead losers in the S&P 500 despite reporting better-than-expected Q2 earnings, as Bloomberg Intelligence said the company’s full-year sales outlook may be viewed as underwhelming amid heightened expectations. 

Five Below (FIVE) closed down more than -13% despite reporting stronger-than-expected Q1 earnings results, as Jeffries said the company’s growth rate might be peaking. 

CrowdStrike Holdings (CRWD) closed down more than -3% after its Q1 earnings beat wasn’t strong enough to lift the stock, which has more than doubled from a March low. 

AT&T (T) closed down more than -3% and Verizon Communications (VZ) closed down more than -3% to lead losers in the Dow Jones Industrials after the US Supreme Court ruled that telecommunications companies can’t immediately demand a jury trial when hit with a Federal Communications Commission fine.

Earnings Reports(6/5/2026)

ABM Industries Inc (ABM), G-III Apparel Group Ltd (GIII), Lifezone Metals Ltd (LZM).