There wasn't much conviction on either side of the tape in the final session of the week, despite gains in the major indices through most of the session. An underlying negative bias drove today's movement.
Market breadth favored decliners by nearly 3-to-1 at the NYSE and by 8-to-3 at the Nasdaq.
The downside bias was in response to a sharp jump in market rates. The 10-yr note yield settled 15 basis points higher today, and eight basis points lower this week, at 4.43%. The 2-yr note yield jumped 15 basis points today, leaving it two basis points lower on the week, at 4.87%.
The price action in Treasuries followed the May Employment Situation Report, which showed higher-than-expected payroll and earnings growth.
Stocks held up well despite the report and the jump in market rates, thanks to ongoing resilience to selling efforts. The equal-weighted S&P 500 closed 0.3% lower, and the market-cap weighted S&P 500 fell 0.1%.
Four of the S&P 500 sectors closed higher, led by financials (+0.4%) and information technology (+0.2%). The utilities (-1.1%) and materials (-1.0%) sectors logged the largest declines.
In other news, GameStop (GME, Financial) shares plunged 36.0% to 29.31 following a disappointing fiscal Q1 earnings report and the company's filing to sell up to 75 million shares of Class A common stock. Selling increased after "Roaring Kitty" livestreamed on YouTube today.
- Nasdaq Composite: +14.1% YTD
- S&P 500: +12.1% YTD
- S&P Midcap 400: +5.0% YTD
- Dow Jones Industrial Average: +2.9% YTD
- Russell 2000: UNCH YTD
Reviewing today's economic data:
- May Nonfarm Payrolls: 272K (consensus 185K); Prior revised to 165K from 175K
- May Nonfarm Private Payrolls: 229K (consensus 168K); Prior revised to 158K from 167K
- May Avg. Hourly Earnings: 0.4% (consensus 0.3%); Prior 0.2%
- May Unemployment Rate: 4.0% (consensus 3.9%); Prior 3.9%
- May Average Workweek: 34.3 (consensus 34.3); Prior 34.3
- April Wholesale Inventories: 0.1% (consensus 0.2%); Prior revised to -0.5% from -0.4%
The key takeaway from the report is the Treasury market's knee-jerk selloff, indicating that the Fed's inflation concerns won't be placated by this release.
Looking ahead, there is no significant US economic data scheduled for Monday.
Today's News
Nvidia (NVDA, Financial) has officially announced its 10-1 stock split, which will take effect on June 7. Trading on a split-adjusted basis will commence on June 10. This move follows Nvidia's strong fiscal first-quarter results and reinforces investor confidence in the tech titan. Nvidia shares closed at $1,208.88 on Friday, down 0.1%.
Keith Gill, also known as Roaring Kitty, made a return to YouTube with a livestream after a three-year hiatus. This event coincided with GameStop (GME, Financial) reporting its Q1 earnings and revealing plans to potentially sell up to 75 million shares. Gill expressed continued confidence in GameStop's potential for reinvention under Ryan Cohen's leadership, despite acknowledging the risks involved.
Google (GOOG, GOOGL) will avoid a jury trial in an antitrust case filed by the U.S. Justice Department regarding its digital advertising dominance. By agreeing to pay $2.3 million to cover the federal government's claim of monetary damages, the trial will now be heard directly by a judge. The case is set to begin on September 9.
Bank of America highlighted the significant impact Nvidia (NVDA, Financial) and the AI investing trend have had on the S&P 500. Excluding Nvidia's stock, the S&P 500’s year-to-date advance narrows to 7.9%. Nvidia’s stock has soared approximately 140% since the beginning of the year, pushing the company’s valuation beyond $3 trillion.
Warner Bros. Discovery (WBD, Financial) has secured the rights to broadcast the French Open tennis tournament, previously aired on Comcast's NBC Sports. The deal will allow Warner Bros. to air the tournament on its television networks, Max streaming service, and Bleacher Report properties. Financial terms were not disclosed.
Exxon Mobil (XOM, Financial) saw a downgrade from Truist Securities to Hold from Buy, with a revised price target of $124, down from $146. Truist cited concerns over Exxon’s free cash flow yield trailing its peers well into 2025 despite positive assets like Guyana and the recent acquisition of Pioneer Natural Resources.
Walgreens Boots (WBA, Financial) has paused plans for an initial public offering of its UK Boots drugstore chain. The company is exploring other options, including potential bidders. Walgreens is conducting a strategic review to drive long-term shareholder value, with all options on the table.
International Paper (IP, Financial) may be valued between $54-$57 per share in a potential takeover by Suzano (SUZ), which is reportedly looking to raise up to $19 billion in debt for the deal. Despite this, IP's board may see the intrinsic value as notably higher, according to Jefferies analyst Philip Ng.
Nvidia (NVDA, Financial) and Alphabet (GOOGL, GOOG) are among the companies that will see their ex-dividend dates next week. This follows a series of dividend increases and declarations from companies like Welltower (WELL, Financial) and Essential Properties (EPRT, Financial) this past week.
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