The futures markets are in the red this morning, following a positive day of trading yesterday. A few earnings releases across the retail sector have disappointed the market. Shares of Target Corp. (TGT), a large general merchandise retailer across the U.S., are falling in premarket action, on bottom-line results that were weaker than the Street’s expectations. Elsewhere, shares of yoga-inspired athletic wear maker lululemon Athletica (LULU) are also lower on news that its Chief Product Officer is leaving the company. Overall, these reports have raised concerns about the strength of the consumer with traders taking some profits after the major market indexes recently reached all-time highs. All this suggests a weaker start to the trading day. After the market opens, several economic reports may well affect trading, such as existing home sales and the release of the minutes of the May Federal Reserve Open Market Committee (FOMC) meeting, which should give insight into the decision-making processes of the Committee.
Yesterday, the stock market started off with a cautious tone but quickly gained momentum, trading higher throughout the day. The S&P 500 and NASDAQ both closed at record highs. The S&P 500 rose by 13 points (0.25%), the NASDAQ increased 38 points (0.22%), and the Dow Jones Industrial Average gained 66 points (0.17%). Market breadth was relatively narrow, with decliners slightly outpacing advancers by a 1.1-to-1.0 ratio. Utilities emerged as strong performers, while energy issues lagged behind.
In the commodity market, oil prices declined yesterday, primarily due to emerging concerns about demand, particularly in Europe. U.S. Treasury bond yields, on the other hand, showed a mixed performance, with short-term rates rising and long-term rates falling. While the majority of traders expect the Fed to maintain interest rates at the next FOMC meeting, which will be held from June 11 to 12, a small group is factoring in the possibility of a rate increase.
Meanwhile, the Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index, continued its decline from mid-April highs to its lows of 2024.
Several economic reports will be released in the days ahead. These include initial jobless claims and the S&P flash U.S. Services and Manufacturing Purchasing Managers’ Indexes. On Friday, durable goods orders and the final Consumer Sentiment Index for May are on the docket. - John E. Seibert III
At the time of this article’s writing, the author did not hold positions in any of the companies mentioned.
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