What you need to know…
The S&P 500 Index ($SPX) (SPY) today is up +0.36%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.39%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.47%.
Stock indexes this morning recovered from overnight losses and moved modestly higher on better-than-expected U.S. economic reports, including May JOLTS job openings and Jun ISM services. Stock indexes initially moved lower today on concern about a global recession. Also, negative carry-over from a -1.4% slide in China’s Shanghai Composite to a 1-1/2 week low today undercut U.S. stock indexes on concern that rising Covid infections in China will lead to additional lockdowns in China that stifle economic growth and snarl global supply chains.
Stock indexes fell back from their best levels today after the 10-year T-note yield moved up from a 5-week low. U.S. equity and interest rate markets will look to the release this afternoon of the minutes of the June 14-15 FOMC meeting for clues on how aggressive the Fed plans to be in tightening monetary policy.
The U.S. Jun ISM services index fell -0.6 to 55.3, stronger than expectations of 54.0.
U.S. May JOLTS job openings fell -427,000 to 11.254 million, showing a stronger labor market than expectations of 11.000 million.
Today’s stock movers…
Consumer-related stocks are climbing today, with Procter & Gamble (PG), General Mills (GIS), Walmart (WMT), Costco Wholesale (COST), and Clorox Co (CLX) all up more than +1%.
Cruise-line stocks are falling today for a second session on recession concerns. Norwegian Cruise Line Holdings (NCLH) is down more than -4% today to lead lowers in the S&P 500. Also, Carnival (CCL) is down more than -2%, and Royal Caribbean Cruises (RCL) is down more than -1%.
HCA Healthcare (HCA) and Universal Health Services (UHS) are down more than -3% today after BMO Capital Markets cut both stocks to underperform from market performance.
EOG Resources (EOG) is down more than -3% today after RBC Capital Markets cut its recommendation on the stock to sector perform from outperform.
U.S. -listed Chinese stocks are falling today on concern that rising Covid infections in Shanghai will prompt the government to impose lockdowns that stifle economic activity. Pinduoduo (PDD) is down more than -6% to lead losers in the Nasdaq 100. Also, Baidu (BIDU) is down more than -5%, and JD.com (JD) and NetEase (NTES) are down more than -4%. Alibaba Group Holding (BABA) is down more than -2%.
Across the markets…
Sep 10-year T-notes (ZNU22) this morning are down -11 ticks, and the 10-year T-note yield is up +6.6 bp at 2.871%. Sep T-notes this morning fell back from a 5-week high, and the 10-year T-note yield rose from a 5-week low at 2.744%. T-notes gave up early gains today and turned lower on stronger-than-expected U.S. economic data today, including Jun ISM services and May JOLTS job openings. T-notes today initially opened higher and posted a 5-week high on carry-over support from a rally in European government bonds as both the 10-year German bund yield and 10-year UK gilt yields fell to 1-month lows. A decline in inflation expectations is also supportive for T-notes as the 10-year breakeven inflation rate sank to a 9-1/2 month low today of 2.280%.
The dollar index (DXY00) this morning is up +0.39%. The dollar index this morning extended Tuesday’s gains up to a new 20-year high. Global recession concerns are supporting safe-haven demand for the dollar. Also, the weakness in EUR/USD is bullish for the dollar as the euro sank to a 20-year low today. In addition, political instability in the UK has knocked the British pound to a 2-1/4 year low against the dollar after five more of UK Prime Minister Johnson’s cabinet members resigned today, adding to the two resignations on Tuesday.
EUR/USD (^EURUSD) is down -0.68% today. EUR/USD today added to Tuesday’s losses and posted a new 20-year low. EUR/USD remains under pressure on concern the ECB will be slow to tighten monetary policy, which has weakened the euro’s interest rate differentials.
Eurozone economic data today was mixed for EUR/USD. On the negative side, Eurozone May retail sales rose +0.2% m/m, weaker than expectations of +0.4% m/m. Conversely, German May factory orders unexpectedly rose +0.1% m/m, stronger than expectations of -0.5% m/m.
USD/JPY (^USDJPY) today is up +0.54%. USD/JPY today is moderately lower as a -1.2% fall in the Nikkei Stock Index today boosted safe-haven demand for the yen. Also, a decline in the 10-year T-note yield today to a 5-week low today is bullish for the yen.
August gold (GCQ22) this morning is down -10.2 (-0.58%), and September silver (SIU22) is up +0.014 (+0.07%). Precious metals today are mixed, with gold falling to a 6-1/2 month low. A rally in the dollar index to a 20-year high today is undercutting metals prices. Gold is also under pressure on reduced demand as an inflation hedge after the 10-year breakeven inflation rate tumbled to a 9-1/2 month low today. On the other hand, silver recovered from a 2-year low today on better-than-expected U.S. economic data that suggests underlying strength in industrial metals demand.
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