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Stock Market News for Jun 6, 2023

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U.S. stock markets closed lower on Monday as market participants were cautiously looking for Fed’s next FOMC meeting this month. Moreover, investors’ sentiment dampened following news that the regulator is mulling tightening capital requirement norms at large banks. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) slid 0.6% or 199.90 points to close at 33,562.86. Notably, 21 components of the 30-stock index ended in negative territory, while nine in positive zone. The tech-heavy Nasdaq Composite finished at 13,229.42, declining 0.1% due to weak performance of large-cap technology stocks. At intraday high, the tech-laden index reached its 52-week high at 13,330,65.

The S&P 500 fell 0.2% to end at 4,273.79. At intraday high, the broad-market index reached at 4,299.28 and exited the bear-market briefly. Seven out of 11 broad sectors of the benchmark index closed in negative territory while four in positive zone. The Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI), and the Technology Select Sector SPDR (XLK) dropped 0.7%, 0.7% and 0.6%, respectively.  

The fear-gauge CBOE Volatility Index (VIX) was up 0.9% to 14.73. A total of 9.7 billion shares were traded on Monday, lower than the last 20-session average of 10.5 billion. The S&P 500 recorded 17 new 52-week highs and four new 52-week lows while the Nasdaq registered 90 new 52-week highs and 54 new 52-week lows.

June FOMC in Focus

The Fed is scheduled to meet for its next FOMC on Jun 13-14. The CME FedWatch tool is showing there exists 76% probability that the central bank will keep the benchmark lending rate at 5-5.25%. However, 24% respondents are expecting a 25 basis-point hike in June.

Inflation has declined to a great extent from its June 2022 level though its still remained highly elevated. Several key economic metrics have declined steadily in the past year. However, the key labor market remained stubbornly resilient. This makes market participants indecisive about Fed’s next move regarding interest rate.

Regulatory Tightening at Large Banks

The Wall Street Journal reported that U.S. regulators led by the Fed are considering are considering hiking capital requirement as much as 20% under new rules as part of a global effort to harmonize capital requirements. The proposed rule to tightened the banking sector is likely to be implement by the end of this month.

Following the news, the shares of banking behemoth like JPMorgan Chase & Co. (JPM - Free Report) and The Goldman Sachs Group Inc. (GS - Free Report) fell 1% and 0.6%, respectively. Both stocks currently 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 said that services PMI (purchasing managers’ Index) dropped to 50.3% in May from 51.9% in April. The consensus estimate was 52.3%. The new orders index fell to 52.9% in May from 56.1% in April. Any reading above 50% indicates expansion of services activities.

Factory orders increased 0.4% month-over-month in April, missing the consensus estimate of 0.6%. March’s data was revised downward from an increase of 0.9% reported earlier to a rise of 0.6%. New orders for manufactured durable goods increased 1.1% in April following a 3.3% rise in March. Shipment of manufactured durable goods decreased 0.7% in April in contrast to a 0.7% increase in March. Unfilled orders for manufactured durable goods in April increased 0.8% following 0.4% rise in March.

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