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Stock Market News for Jul 6, 2022

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Wall Street closed mixed on Tuesday after an extremely choppy session. Market participants tried to gauge U.S. economic slowdown and a possible recession and are also waiting for a series of major economic data to be released this week. The S&P 500 and the Nasdaq Composite ended in positive territory while the Dow finished in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) dropped 0.4% or 129.44 points to close at 30,967.82.  Notably, 12 components of the 30-stock index ended in positive territory while 18 in red. The blue-chip index plunged more than 700 points at intra-day low. .

The tech-heavy Nasdaq Composite finished at 11,322.24, rising 1.8% or 194.39 points due to strong performance of large-cap technology stocks. The tech-laden index was deep in red at the beginning of the trading session.

The largest gainer of the index was Zoom Video Communications Inc. (ZM - Free Report) , shares of which surged 8.5%. Zoom Video carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 gained 0.2% to end at 3,831.39. The broad-market index was down more than 2% at session’s low. Eight out of 11 broad sectors of the benchmark index closed in negative zone while three ended in green.

The Utilities Select Sector SPDR (XLU), the Energy Select Sector SPDR (XLE) and the Materials Select Sector SPDR (XLB) tumbled 3.4%, 4% and 2%, respectively. On the other hand, the Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) advanced 2.3%, 2.4% and 1.3%, respectively.  

The fear-gauge CBOE Volatility Index (VIX) was up marginally to 27.54. A total of 12.39 billion shares were traded Tuesday, lower than the last 20-session average of 13.03 billion. Decliners outnumbered advancers on the NYSE by a 1.33-to-1 ratio. On Nasdaq, a 1.37-to-1 ratio favored advancing issues.

Concerns About U.S. Economic Growth

Investors remained highly skeptical regarding the U.S. economic growth as an important section of the government bond yield curve inverted for a brief period in mid-day session. Theoretically, yield to maturity is higher for bonds with longer time to maturity. However, on Jul 5, the yield on the 2-Year U.S. Treasury Note was 2.792% while the yield on the 10-Year U.S. Treasury Note was 2.789%.

The yield inversion between 2-year and 10-Year Treasury Notes generally considered as a signal for slowing economic growth and a possible recession. This was the third time this year, that investors see inverted yield curve. The first happened in March and the second in June.

Concerns regarding slowing economic growth was also visible in the energy sector as market participants are expecting a fall in demand. The price of the WTI crude was down 8.24% to settle at $99.5 per barrel. The WTI crude price fell below $100 per barrel for the first time since May 11. The price of the Brent crude was down 9.5% to settle at $102.77 per barrel.

On a positive note, the Biden administration is thinking of either reducing or complete roll over of a part of tariffs imposed by the former trump administration on Chinese goods. Most of the U.S. corporates uses low-cost Chinese products as inputs. The White House believe this may reduce current inflationary products.

Economic Data

The Department of Commerce reported that factory orders in May jumped 1.6% in May compared with the consensus estimate of 0.6%. April’s data was revised upward to 0.7% from 0.3% reported earlier. In May, durable goods orders rose 0.8% while non-durable goods orders climbed 2.3%. The core factory orders (excluding transportation and government spending on defense) rose 0.6%. This metric is viewed as a proxy of business investment.

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