U.S. stocks closed mixed on Tuesday after gaining over two consecutive winning sessions. However, movements of indexes were modest in either direction as investors are closely watching the outcome of the meetings of the U.S. Federal Reserve and European Central Bank (ECB) taking place this week. Meanwhile, investors’ concerns regarding trade war and geopolitical conflicts waned, at least for the time being, as President Donald Trump and North Korea leader Kim Jong Un signed an agreement to denuclearize Korean peninsula and stop war game in that region.
The Dow Jones Industrial Average (DJI) closed at 25,320.73, down 1.58 points. However, the S&P 500 Index (INX) increased 0.2% to close at 2,786.85. The Nasdaq Composite Index (IXIC) closed at 7,703.79, gaining 0.6%. A total of 6.4 billion shares were traded on Tuesday, lower than the last 20-session average of 6.6 billion shares. Decliners outnumbered advancers on the NYSE by 1.02-to-1 ratio. The CBOE VIX decreased 0.1% to close at 12.34.
How Did the Benchmarks Perform?
The Dow lost 1.58 points with 16 of the 30-stocks in the index closed in the red while 12 traded in the green and 2 remained unchanged. Notably, Verizon Communications Inc. (VZ - Free Report) was the major decliner of the blue-chip index with a loss of nearly 1%. Verizon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 advanced 0.2% buoyed by 1.2% gain of the Utilities Select Sector SPDR (XLU) and 1.1% gain of Homebuilders Select Sector SPDR (XHB). Notably, seven out of 11 sectors of the benchmark index ended in positive territory.
The tech-laden Nasdaq Composite gained 0.6% supported by advancement of major large-cap tech stocks.
Three Major Central Banks in Focus
On Jun 13, the U.S. Federal Reserve (the Fed) will announce its decision about interest rate following the two-day Federal Open Market Committee’s (FOMC) policy meeting. The market is widely anticipating the Fed will raise benchmark interest rate to cool down inflationary tendency and the growing U.S. economy.
The European Central Bank (ECB) will also meet this week to take a decision whether it will abandon its ongoing bond purchase program. A decision in this regard may result in a hike in the yield of the U.S. government bonds. Additionally, the Bank of Japan will also release its outlook for economic activity and prices this week.
Muted Market Response on Trump-Kim Summit
The historic meeting between President Trump and his North Korean counterpart Kim Jong Un failed the generate much of investor’s enthusiasm. An agreement was signed committing to complete denuclearization of the Korean Peninsula. Moreover, the two countries promised to make efforts to create a lasting “peace regime” across Korea. However, the agreement lacked of detail about the path and timing to denuclearization on the peninsula.
The Labor Department reported that the U.S. Consumer Price Index (CPI) rose 0.2% in May remaining same with that of April reading. However, in the 12 months through May, the CPI increased 2.8%, the biggest advance since February 2012. In April, this metric rose by 2.5%.
Excluding food and energy prices, the core CPI inched up 0.2% in May compared with 0.1% gain in April. Rise of core CPI is May was supported by a turnaround of new motor vehicle prices and an increase in the health care cost. The core CPI increased 2.2% year-over-year in May, the largest rise since February 2017.
According to the National Federation of Independent Businesses, the U.S. small business optimism index's reading in May was 107.8, an increase of 3 points from April. The May reading was highest level in more than 30 years and second-highest level in the index's 45-year history. The small business optimism index touched a record high 108.0 in 1983. Notably, small businesses account for around 40% of total hiring in the United States and are a good indicator on overall economic activity.
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