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Stock Market News For Jun 4, 2019

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Wall Street closed mostly lower on Monday following the news that federal agencies are investigating technology behemoths about possible violation of anti-trust laws. Consequently, the Nasdaq Composite entered into correction territory. Moreover, no positive sign has appeared on the trade war front. The S&P 500 continued its losing streak while the Dow managed to gain slightly.

The Dow Jones Industrial Average (DJI) inched up 4.74 points to close at 24,819.78. The S&P 500 slipped 0.3% to close at 2,744.45. Meanwhile, the Nasdaq Composite Index closed at 7,333.02, plunging 1.6% or 120.13 points. The fear-gauge CBOE Volatility Index (VIX) increased 0.8% to close at 18.86. A total of 8.34 billion shares were traded on Monday, higher than the last 20-session average of 7.11 billion. Advancers outnumbered decliners on the NYSE by a 1.51-to-1 ratio. On Nasdaq, a 1.12-to-1 ratio favored declining issues.

How Did The Benchmarks Perform?

The Dow managed to close in positive territory with 21 components of the 30-stock blue-chip index closing in the green while nine finished in the red. However, the S&P 500 closed in the red.The Communication Services Select Sector SPDR (XLC) and Technology Select Sector SPDR (XLK) tumbled 3.1% and 1.8%, respectively. However, Minerals Select Sector SPDR (XLB) gained 3.2%. Notably, eight out of eleven sectors of the benchmark index closed in the green while three finished in the red.

Moreover, tech-heavy Nasdaq Composite ended in negative territory due to weak performance by trade-sensitive large-cap stocks. The tech-laden index entered into correction territory as it fell below 10% from its latest high of 8,164 recorded in May 3.

Tech Majors Under Government Scanner

The technology sector tumbled on Jun 4 following reports that the U.S. government is in the process of stepping up investigations against four tech behemoths following concerns about antitrust violations and concerns about their business practices. Several members of congress have spoken in favor of breaking up tech giants in order to prevent anti-trust law violations.  

Consequently, shares of Alphabet Inc. (GOOGL - Free Report) , Facebook Inc. (FB - Free Report) , Inc. (AMZN - Free Report) and Apple Inc. (AAPL - Free Report) plunged 6.1%, 7.5%, 4.6% and 1%, respectively.  Facebook carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Free Fall of Government Bond Yields

On Jun 3, Chinese Vice Commerce Minister Wang Shouwen said in a white paper that his country will not allow the United States to forcefully impose a trade deal on China. He was not sure about whether discussions would occur between President Trump and Xi during the upcoming G-20 summit. The lack of positive news on the trade war front has dented investors’ confidence.

On Jun 3, yield on 10-year U.S. Treasury Note plunged to 2.062%, its lowest since September 2017 before settling at 2.134%. Notably, the yield on 10-year government bond was hovering around 2.55% in the first week of May.

Meanwhile, yields on 3-month U.S. Treasury Bill and 1-year U.S. Treasury Note were flat at 2.349% and 2.134%, resulting in a negative spread or partial inversion of Treasury Yield curve. The yield on long-term 30-year U.S. Treasury Note also dropped to 2.557%.

Economic Data

The Institute of Supply Management (ISM) reported that U.S. manufacturing PMI for the month of May was 52.1, the lowest since December 2016. The consensus estimate was 52.9. April’s PMI was at 52.8. The Supplier deliveries index declined 2.6% to 52 while the Inventories index dropped 2% to 50.9. Construction spending rose 0.1% in May, flat with the previous month’s revived figure. However, the consensus estimate was for a gain of 0.3%.

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