Stock Market News for Jun 28, 2021
Benchmarks finished mixed on Friday as investors continued to keep an eye on fresh economic data, a day after infrastructure spending news helped the broader market hit all-time highs. The Dow and the S&P 500 ended in the green as concerns about higher inflation ebbed mostly due to the reopening of the economy from the coronavirus-led drubbing it took last year. Separately, Nike’s blowout fiscal fourth-quarter earnings results buoyed its shares and helped the blue-chip index scale upwards. However, the tech-laded Nasdaq somewhat ended in the red. Nonetheless, all the major indexes closed in the positive territory for the week.
The Dow Jones Industrial Average (DJI) rose 237.02 points, or 0.7%, to close at 34,433.84 and the S&P 500 added 14.21 points, or 0.3%, to close at 4280.70. The Nasdaq Composite Index closed at 14,360,39, declining 9.32 points, or less than 0.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 2.2%, to close at 15.62. Advancing issues outnumbered declining ones for 1.29-to-1 ratio on the NYSE, while a 1.22-to-1 ratio on the Nasdaq favored advancers.
How Did the Benchmarks Perform?
The S&P 500 hit another closing record high of 4,280.70, led by the financials that closed 1.3% higher, its best-performing sector for Friday. Of the 11 major sectors of the broader index only the technology sector ended in the red. Along with the financials, the utilities sector also rose 1.1% in the last session, boosted by the infrastructure deal on the day before.
The Dow traded close to its May 7’s record of 34,777.76. The blue-chip was pushed higher led by a 15.5% jump in shares of NIKE, Inc. NKE, that reported better-than-expected fourth-quarter fiscal 2021 earnings after market close on Thursday. The shoe-maker currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Additionally, the results of the Federal Reserve’s latest stress tests, released last on Thursday also pushed banking shares higher on Friday. Share of Wells Fargo & Company WFC, Bank of America Corporation BAC and JPMorgan Chase & Co. JPM closed 2.7%, 1.9% and 1%, higher respectively.
Significant decline in technology stocks pushed the Nasdaq into the negative territory on Friday. More than 4% rise in Baidu, Inc. BIDU and JD.com, Inc. JD, could not outpace more than 1% decline in big techs like Amazon.com, Inc. AMZN and chipmakers like Applied Materials, Inc. AMAT and Xilinx, Inc. XLNX.
On Friday, the S&P 500 posted 32 new 52-week highs and no new lows, while the Nasdaq Composite recorded 149 new highs and 14 new lows.
Inflation Rose at the Fastest Annual Pace Since 2008
On Friday, the Commerce Department reported that PCE prices index climbed 0.4% in May, the third straight monthly increase, after 0.6% rise for two consecutive months. The report states that consumer prices have jumped 3.9% over the year, which is the biggest gain since 2008. Core PCE, that exclude food and energy prices rose 0.5% in May, lower than previous month’s rise of 0.7%.
The report highlights that economic reopening has pumped up demand and businesses in several cases have raised prices to counter shortage of key supplies and labor. Hence, households are feeling the pinch of higher prices while shopping for groceries or filling up their gas tanks.
Additionally, the report also shows that consumer spending has remained unchanged for the month of May, while there was an estimate of 0.3% increase after an upwardly revised 0.9% increased in April. While Americans refrained from spending generously, they are spending enough to keep the economy humming and keep it above pre-pandemic levels. Most Americans did cut spending on goods such as new cars and trucks last month, while restaurants, hotels and recreation centers saw traffic as restrictions are being eased.
The same report also stated that personal incomes declined 2%, slightly lower than the consensus estimate of 2.8% decline and much lower than previous month’s 13.1% decline. Additionally, the savings rate slipped to 12.4% in May, lower than April’s downwardly revised rate of 14.5%. However, rates are well above pre-pandemic levels, but consumers have to battle out rising inflation as pay more for many goods and services.
In a separate report, the University of Michigan reported that its consumer-sentiment index slipped in the second half of June, after the mid-month preliminary estimate of 86.4, but above the 82.9 reading registered in May. June’s consumer sentiment index came in at 85.5, as consumers remained slightly more optimistic this month despite elevated prices and a slower-than-expected recovery in the job market.
Nike’s Blowout Earnings Pushed the Dow Higher
On Jun 24, Nike reported fourth-quarter fiscal 2021 earnings after market close. The shoe maker reported earnings of 93 cents per share, against a 51 cents loss per share reported in the year-ago quarter and beat the Zacks Consensus Estimate of earnings of 51 cents per share. Nike’s strong results were due to return of sports activity, reopening of brick-and-mortar retail operations, strength in the wholesale business and continued growth of NIKE Digital. (Read More)
Weekly Roundup
For the week ending Jun 25, the Dow, the S&P 500 and the Nasdaq rose 3.4%, 2.7% and 2.4%, respectively. Benchmarks remained mostly in the green throughout the week as investors kept track of economic data, putting bet that higher inflation in just temporary and also focused on the infrastructure deal. The broader index notched its biggest weekly gain since early February, while the blue-chip Dow made its best week since mid-March.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Bank of America Corporation (BAC) : Free Stock Analysis Report
Wells Fargo & Company (WFC) : Free Stock Analysis Report
JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
NIKE, Inc. (NKE) : Free Stock Analysis Report
Xilinx, Inc. (XLNX) : Free Stock Analysis Report
Baidu, Inc. (BIDU) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
JD.com, Inc. (JD) : Free Stock Analysis Report
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