The S&P 500 (SPX) began yesterday with a bang. By 10:00 am, the index was very near its record high at 4,238. Unfortunately, that is when sellers emerged sending most of the averages lower into the close, notes Jon Markman of Pivotal Point.
The benchmark S&P finished at 4,202, off 0.05% while the Nasdaq gave back Friday’s 0.9% gain. The standout was smaller stocks. Strength for regional banks, industrials, and energy powered the Russell 2000 to a 1.14% gain.
This kind of broad market strength among the small-caps and mid-caps is normally indicative of an underlying bid for stocks. There is support for the S&P at 4,170 and I expect any decline to that level to revive buying interest.
Advancers outpaced decliners by a big 5-2 margin and there were 1,070 new one-year highs vs. 49 new lows. Topping the new high list were Toyota Motor (TM), Morgan Stanley (MS), American Express (AXP), Goldman Sachs (GS), Stellantis (STLA), Simon Property (SPG), and Nucor (NUE). Great leadership led by cyclicals.
The Institute for Supply Management's US manufacturing index rose to 61.2 in May from 60.7 in April, compared with expectations for an increase to 60.9. There was an increase in new orders but declines in the production, employment, and prices components, though all of these continue to signal growth.
West Texas Intermediate crude oil futures rose $1.60 to $67.92 per barrel. A joint technical committee of OPEC forecast stockpiles will fall by at least two million barrels a day from September through December, a report from Bloomberg said. The cartel ratified a scheduled July increase in joint output Tuesday as an economic recovery in the US and Europe has given producers the confidence that markets can absorb additional barrels.
In company news, Raymond James (RJF) upgraded Devon Energy (DVN) to strong buy from outperform and increased the price target to $40 from $34. Shares jumped 13.7%. The worst performer on the index was Abbott Laboratories (ABT), which lowered its guidance for full-year 2021 adjusted earnings per share to a range of $4.30 to $4.50, from $5 previously. The company cited "significantly" lower recent and projected COVID-19 diagnostic testing demand. Shares were down 9.3%.
Learn more about Jon Markman at Pivotal Point.
