Daily market review

United States

A mixed showing among sectors left major equity indexes steady to slightly weaker Tuesday. The Dow Jones industrial average and the S&P 500 both declined 0.2 percent, and the NASDAQ was unchanged.

Mega-caps retreated from opening highs in the morning as they appeared to consolidate Monday's rally in growth/technology shares. Then came a batch of weaker-than-expected economic reports that took more air out of the market and fed discussion that growth has peaked, but the investors didn't show much conviction either way. Declining bond yields after the data didn't provide growth/momentum stocks their usual jolt.

Among sectors, positive updates on traffic from United Airlines (up 1.5 percent) and Delta (up 1.1 percent) gave airlines a boost to help industrials outperform, along with Boeing (up 1.4 percent) and cruise lines Royal Caribbean (up 3.7 percent) and Norwegian Cruise Line (up 3.6 percent). Technology and consumer discretionary shares firmed but didn't go far. Communications services were bolstered by gains in Disney, up 1.1 percent, and Facebook, up 1.0 percent. Homebuilders gained on strength in house price reports, while KB Home rose 3.3 percent on stronger-than-expected orders.

On the downside, energy stocks lagged, as oil majors and servicers were off, with ConocoPhillips down 2.2 percent and Apache, the driller, down 4.5 percent. Materials lagged with declines in industrial and precious metals. Consumer staples and utilities also lagged.

Among companies in focus, Moderna rose 3.1 percent after announcing its vaccine works for teenagers. Coinbase rose 7.6 percent after a positive analyst rating. On the downside, Dycom, the engineering firm, fell 15 percent after disappointing results and guidance. Lordstown Motors, the electric vehicle maker, fell 7.5 percent on an earnings miss.

In US economic news, new home sales for April came in at a much lower-than-expected annual rate of 863,000 with a sharp 104,000 downward revision to March to 917,000. Yet the report was still very strong, especially prices, which jumped a monthly 11.4 percent. Meanwhile, consumer confidence missed expectations in May at 117.2 with April revised down too.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 1 cent to US$68.47 while spot gold rose US$16.82 to US$1,899.51. The US dollar declined vs. most major currencies. The US Treasury 30-year bond yield was down 5 basis points at 2.26 percent and the 10-year note yield declined 5 basis points to 1.56 percent.


Equities were narrowly mixed Tuesday with a rally in technology shares offsetting losses in miners and commodity-linked stocks. The Europe-wide STOXX 600 was flat, the German DAX firmed 0.2 percent, while the French CAC and UK FTSE both eased 0.3 percent.

European tech stocks tracked Monday's US market bounce with help from more talk from US and European central bankers downplaying inflation worries. ASML, the Dutch semiconductor leader, gained 2.1 percent, and Prosus, the Dutch internet company, rose 1.4 percent. Miners and commodity stocks, on the other hand, dropped in response to a crackdown by Chinese regulators on commodity market speculators. Among miners, BHP fell 1.6 percent while Glencore fell 2.1 percent.

Among other sectors, autos & parts, travel & leisure, financial services, and retail all outperformed. Lagging, in addition to basic resources, were oil & gas, insurance, telecom, health care, media, and chemicals.

In economic news, Germany's Ifo survey found a tidy improvement in overall business sentiment this month. The headline climate indicator rose from 96.6 to 99.2, its third increase in the last four months and its highest mark since April 2019.

Asia Pacific

Asia/Pacific markets advanced Tuesday on carry-over from strength on Wall Street, with technology and other growth stocks strong across the region as inflation concerns diminished.

Chinese markets rallied with the Shanghai composite up 2.4 percent and the CSI 300 surging by 3.2 percent as the stronger yuan encouraged foreign demand for Chinese equities. Consumer staples outperformed as investors chose relatively defensive assets in response to Chinese regulatory efforts to rein in financial speculation, with the latest focus on commodities. Kweichow Moutai, the huge mainland drinks company, rallied 6 percent on strong guidance. Other best performers included financials, energy, and utilities, with a boost from declining inflation concerns, partly in response to reassuring comments from Fed officials.

Taiwan's Taiex tracked Chinese markets with a gain of 1.6 percent while Hong Kong's Hang Seng index rose 1.8 percent, paced by energy, technology, and financials. Among stocks in focus, CSC Financial rose 9.7 percent on news the city of Shanghai will allow more asset management business.

Japanese equities firmed with the Nikkei up 0.7 percent and the broader Topix up 0.3 percent, with the US rally in tech stocks providing support. Gains were limited by worries about delayed economic recovery amid expectations for more regions to boost anti-Covid restrictions, along with the US warning to avoid travel to Japan, coming shortly before the scheduled start of the summer Olympics. Most stock sectors were higher as growth outperformed value. Semiconductors paced the winners, with Advantest up 2.4 percent.

Australia's All Ordinaries advanced 1.0 percent with tech stocks tracking Wall Street higher and energy stocks rising with oil prices. Among sectors, only utilities declined, while real estate and telecom outperformed. Materials were supported by a rebound in iron ore prices, and retailers boosted consumer discretionary.

Looking ahead*

On Wednesday in Asia/Pacific, the Reserve Bank of New Zealand will issue its policy announcement, and the New Zealand merchandise trade report is due for release. In Europe, the French business climate indicator is scheduled. In North America, no major US or Canadian reports are scheduled.

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Global Currency Recap

Commodities and currencies