Zinger Key Points
- The tentative budget deal needs to clear the Rules Committee on Tuesday, before reaching the House.
- Tech stocks continued to outperform other sectors an AI-driven frenzy.
- Get Monthly Picks of Market's Fastest Movers
Volatility marks Tuesday's session in the U.S. stock market, as investors are focusing on the AI-centric rally and awaiting the House Rules Committee's vote on the debt limit agreement.
Nvidia Corp. NVDA has joined the exclusive club of Apple Inc. AAPL, Microsoft Corp. MSFT, Alphabet Inc. GOOGL GOOG, and Amazon, Inc. AMZN in reaching over a $1 trillion market capitalization.
The debt ceiling agreement reached over the weekend by President Joe Biden and House Speaker Kevin McCarthy must now clear the House Rules Committee, where three Republican committee members may vote against the measure before it can go to the House floor.
Meanwhile, investors raised their expectations for a Fed interest rate hike in June, now assigning a 60% chance according to the CME Group Fedwatch tool.
Cues From Tuesday's Trading:
The tech-heavy Nasdaq 100 index continued to outperform other major averages, unchanged on the day, while the S&P 500 index and the Dow Jones Industrial Average fell 0.3% and 0.7% respectively. Small caps in the Russell 2000 index fell 0.5%.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq 100 | +0.01% | 14,373.68 | |
| S&P 500 Index | -0.32% | 4,202.17 | |
| Dow Industrials | -0.5% | 32,931.38 |
Analyst Color:
History hints at a strong second half for the market, said LPL Financial’s chief equity strategist Jeffrey Buchbinder.
"Since 1950, in years when the S&P 500 has been up at least 7% through the first 100 trading days, the average gain over the rest of the year has been a robust 9.4%." He juxtaposed this to the average gain of 5.4% observed from the 101st trading day through the end of the year across all years.
Buchbinder said, “In general, strong starts tend to be followed by solid finishes.”
The consistency of these strong finishes is also impressive, he said, adding that after these strong starts, the S&P 500 has added to those gains in 23 of 26 years.
Tuesday's Trading In Major US Equity ETFs: In midday trading on Tuesday, the SPDR S&P 500 ETF Trust SPY was 0.1% lower to $419.74, the SPDR Dow Jones Industrial Average ETF DIA fell 0.5% to $329.18 and the Invesco QQQ Trust QQQ was 0.6% higher to $350.39, according to Benzinga Pro data.
The performance of U.S. equity sectors was mixed, with notable gains from the Technology Select Sector SPDR Fund XLK, up 0.9%, and sharp losses from the Energy Select Sector SPDR Fund XLE.
Latest Economic Data:
The non-seasonally adjusted S&P CoreLogic Case-Shiller 20-city house price index in the United States rose 1.5% month over month in March 2023, the largest since May 2022 and after an upwardly revised 0.3% gain in February.
The Conference Board reported a reduction in its consumer confidence index from 103.7 in April to 102 in May, exceeding expectations of 99.
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Stocks In Focus:
- C3.ai, Inc. AI rose more than 15% ahead of the company’s quarterly results due on Wednesday. The stock has now risen 237% year to date. Palantir Technologies, Inc. PLTR climbed over 7% on optimism over its AI opportunity.
- Ford F surged over 4% after a partnership with Tesla Inc. TSLA to allow Ford electric vehicle owners to use the Tesla Supercharger networking.
- Accenture plc ACN was up 4.1% after the company announced plans to acquire the Brazilian sustainability consultancy Green Domus Desenvolvimento Sustentavel.
- Among those reporting after the close are Hewlett-Packard Enterprises Company HPE, HP, Inc. HPQ, Box, Inc. BOX and Ambarella, Inc. AMBA.
Commodities, Bonds, Other Global Equity Markets:
Crude oil sank 4.7%, with a barrel of WTI-grade crude falling to $69.50. The United States Oil Fund ETF USO was 4.1% lower to $62.10 per share.
Treasury yields broadly declined, with the 10-year yield down by 7 basis points to 3.70% and the two-year yield down 11 basis points to 4.5%. The iShares 20+ Year Treasury Bond ETF TLT was 0.8% higher for the day.
The dollar strengthened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.1%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, rose 0.1% to 1.0720.
European equity indices closed in the red. The SPDR DJ Euro STOXX 50 ETF FEZ fell 1.2%.
Gold rose 0.8% to $1,960/oz. The SPDR Gold Trust GLD was 0.6% lower to $182. Silver was unchanged at $23.15, with the iShares Silver Trust SLV down 0.5% to $21.28 per unit. Bitcoin BTC/USD fell 0.2% to $27,693.
Staff writer Piero Cingari updated this report midday Tuesday.
Photo: Shutterstock
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