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Stock Market News for Jun 24, 2022

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·5 min read
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Wall Street closed higher on Thursday, led by defensive and tech stocks. Investors continued to weigh in the possibility of an economic downturn, and markets were driven by defensive sectors like utilities and health care, which will be relatively unaffected if the economy enters into recession. The yield on the 10-year treasury note hit its lowest level in roughly two weeks. All three major stock indexes ended in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.6% or 194.23 points to close at 30,677.36. Twenty components of the 30-stock index ended in the green, one remained unchanged, while nine ended in the red.

The tech-heavy Nasdaq Composite finished at 11,232.19, adding 1.6% or 179.11 points.

The S&P 500 gained 1% or 35.84 points to close at 3,795.73. Seven of the 11 broad sectors of the benchmark index closed in the green. The Utilities Select Sector SPDR (XLU), the Health Care Select Sector SPDR (XLV) and the Real Estate Select Sector SPDR (XLRE) rose 2.4%, 2.2% and 2%, respectively, while the Energy Select Sector SPDR (XLE) declined 3.7%.

The fear-gauge CBOE Volatility Index (VIX) went up 0.4% to 29.05. A total of 12.4 billion shares were traded Thursday, lower than the last 20-session average of 12.5 billion. Advancers outnumbered decliners on the NYSE by a 1.41-to-1 ratio. On the Nasdaq, a 1.67-to-1 ratio favored the advancing issues.

Investors Rush To The Safety Of Defensive Stocks

Fears of an impending recession have been ruling investor sentiment for the past few weeks due to various policy tightening measures, primarily interest rate hikes, taken up by the Fed to tackle inflation. Markets remained volatile as investors guessed and second-guessed the impact of these policies on the U.S. economy in the coming months. Weekly losses were, however, interspersed with days when markets finished in the green. Thursday was one such day when investors saw sectors like utilities and health care as reasonable fallback options that will be relatively unaffected in the event of a recession.

Oil Prices Remain A Drag On The Energy Sector

Oil prices fell on Thursday on concerns that rate hikes by the Fed could push the U.S. economy into recession, reducing fuel demand. Brent crude fell $1.69 to settle at $110.05/barrel, while WTI crude fell $1.92 to settle at $104.27/barrel. The Energy sector fell 3.8%, dragged down primarily by oil prices and continued its recent slump after outperforming other sectors throughout 2022, erasing further gains it had made earlier in the week. Energy was the single biggest drag on the S&P 500 on Thursday.

Tech Sector Boosted By Falling Yields In The Bond Market

Yields fell in the U.S. bond market on a belief that yields may have peaked in the near term even if inflation stayed high. Yields have dropped from their highest levels in over a decade reached before last week’s Fed meeting, when the 75-basis-point-rate hike, the biggest increase since 1994, was announced. The benchmark U.S. 10-year treasury note yield fell to 3.005% in the session, before finishing at 3.070%. The yield has dropped from 3.498% on Jun 14, the worst fall since April 2011.

Bond yields move inversely to prices, and growth stocks, such as from the mega-cap tech space, look lucrative in the event of yields going down as they do not look overvalued in the near term. Nasdaq was the biggest mover on the day, riding on tech stocks.

Consequently, shares of Apple Inc. AAPL and Microsoft Corporation MSFT gained 2.2% and 2.3%, respectively. Apple currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Labor Department said on Thursday that initial jobless claims fell by 2,000 to 229,000, for the week ending Jun 18. The previous week's level was revised up by 2,000 from 229,000 to 231,000. The four-week moving average came in at 223,500, marking an increase of 4,500 from the previous week’s revised average of 219,000.

However, continuing claims came in at 1,315,000, increasing 5,000 from the previous week’s revised level. The previous week's numbers were revised down by 2,000 from 1,312,000 to 1,310,000. The 4-week moving average came in at 1,310,000, a decrease of 7,000 from the previous week's revised average. This is the lowest level for this average since Jan 3, 1970, when it was 1,280,250.

American Petroleum Institute reported that U.S. crude inventories had risen by 5.61 million barrels against a consensus of decline of 1.43 million barrels. This is the first build of more than 5 million barrels since mid-February.

Stocks That Have Made Headline

FedEx Q4 Earnings Miss, Stock Up on Upbeat FY23 View

FedEx Corporation’s FDX fourth-quarter fiscal 2022 (ended May 31, 2022) earnings (excluding $4.74 from non-recurring items) of $6.87 per share missed the Zacks Consensus Estimate of $6.91. (Read More)

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