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Stock Market News for Jun 2, 2021

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Wall Street closed mixed on Tuesday, the first trading day of June. Stock price movements were marginal either way as positive effects of strong economic data were offsets by investors' growing concerns of an impending inflation. The Dow managed to eked out gains while both the S&P 500 and the Nasdaq Composite ended in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was up 0.1% to close at 34,575.31, maintaining four-day winning streak. Notably, 13 components of the 30-stock index ended in the green while 17 in red. The tech-heavy Nasdaq Composite finished at 13,736.48, sliding 0.1% due to weak performance by large-cap technology stocks.

Meanwhile, the S&P 500 was down 0.1% to end at 4,202.04, ending a three-day winning run.  However, the Energy Select Sector SPDR (XLE) the Real Estate Select Sector SPDR (XLRE) and the Materials Select Sector SPDR (XLB) rallied 3.9%, 1.7% and 1.4%, respectively, while the Health Care Select Sector SPDR (XLV) tumbled 1.6%. Notably, six out of eleven sectors of the benchmark index closed in the green while five in red.

The fear-gauge CBOE Volatility Index (VIX) was up 6.8% to 17.90. A total of 10.7 billion shares were traded on Tuesday, higher than the last 20-session average of 10.5 billion. Advancers outnumbered decliners on the NYSE by a 2.54-to-1 ratio. On Nasdaq, a 1.79-to-1 ratio favored advancing issues.

Crude Oil Prices Jump

Several oil analysts have projected that crude oil demand will continue to grow buoyed by global economic recovery and will reach pre-pandemic level by mid-2022. Members of the Organization of the Petroleum Exporting Countries and their allies agreed to increase oil production by about 450,000 barrels a day, starting next month.

On Jun 1, price of Brent crude - the international benchmark - rose 1.3% to $70.25 a barrel, reflecting its highest close since May 2019. The price of WTI crude - the U.S. benchmark - gained 2.1% to $67.72 a barrel, marking its highest close since June 2018.

Consequently, shares of oil behemoths like Exxon Mobil Corp. (XOM - Free Report) , Chevron Corp. (CVX - Free Report) , EOG Resources Inc. (EOG - Free Report) and ConocoPhillips (COP - Free Report) surged 3.6%, 2.9%, 5.3% and 4.5%, respectively. These stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Institute of Supply Management (ISM) reported that its manufacturing Purchasing Managers' Index (PMI) increased to 61.2% in May from 60.7% in April. The consensus estimate was 60.8%. Notably, any reading above 50% indicates expansion in manufacturing activities and a reading above 60% is generally recognized as exceptional. The reading for May reflects 12th consecutive months of growth.

New orders index jumped to 67% in May from 64.3% in April, stood at nearly 17-year high. However, production index dropped to 58.5% in May from 62.5% in April and employment index decreased to 50.9% in May from 55.1% in the previous month.

Despite growing demand, manufacturers are facing pricing pressure due to  higher input costs owing to the supply-chain destruction during pandemic and shortage of skilled labor. Consequently, the backlog of orders index rose to 70.6% in May from 68.2% in April. Notably, sixteen out of 18 manufacturing industries reported growth in May.

The IHS Markit reported that the final reading of its U.S. manufacturing PMI for May came in at 62.1% compared with 61.5% in the preliminary reading and 60.5% in April. May's reading was the highest in the 14-year series history. New orders and production grew sharply in May. However, supply-side bottlenecks significantly affected manufacturers.

Construction spending in April grew 0.2% in line with the previous month. However, the consensus estimate was 0.5%.

Expectations of an Impending Inflation

Market participants remained concern that the U.S. economy will face inflationary pressure this year. The recently released core PCE price index and consumer price index have indicated this. Healthy consumer spending along with supply chain bottlenecks and shortage labor are generating both demand-pull and cost-push inflations.

Stocks That Have Made Headline

Pembina Inks Deal to Buy Inter Pipeline for C$8.3B

Pembina Pipeline Corp. (PBA - Free Report) has entered into a definitive agreement with Inter Pipeline Ltd. wherein it will acquire all the issued and outstanding shares of IPL in an all-stock deal worth C$8.3 billion. (Read More)

Kinder Morgan Inks $1.2B Accord to Acquire Stagecoach

Kinder Morgan Inc. (KMI - Free Report) has entered into an agreement to acquire Stagecoach Gas Services LLC (Stagecoach). The $1.225-billion deal is likely to consummate in the third quarter of this year, awaiting regulatory approval under Hart-Scott-Rodino. (Read More)

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>