Stock Market Update - Mon Jun 11 16:20:01 EDT 2007
[BRIEFING.COM] After stocks turned in their worst weekly performance since February last week, it wasn't surprising to see buyers step back into the market looking for bargains Monday. However, the major averages ran out of steam going into the close. They ended up finishing mixed and relatively unchanged ahead of some influential economic data later in the week that begins with Tuesday's retail sales report for May.
Since rising interest rates still act as the biggest overhang for owning equities, participants initially looked past another bump up in bond yields in hopes that low inflation numbers later in the week will cool renewed fears about a rate hike later in the year. We feel the current rate hike concerns are overblown since there is no evidence to suggest a Fed tightening anytime soon.
With anticipation of Monday-morning M&A activity helping the market (e.g. Dow, Nasdaq) log its 12th consecutive Friday close to the upside last week, the first Monday in a while without a full slate of takeover talk to report also left investors skeptical about Friday's rebound.
Of the six sectors trading lower, Materials (-0.8%) paced the way as investors lost interest in one of the market's more momentum-driven areas of late.
Steel (-5.3%), which was recently up 28% year to date, was today's worst performing S&P industry group after ThyssenKrupp denied it is in talks to acquire U.S. Steel (X 116.25 -8.80). Speculation of such a deal was the driving force behind Friday's recovery effort. A Q2 warning from Nucor (NUE 62.62 -3.99) merely gave investors an added incentive to take some money off the table.
On a positive note, Utilities (+1.1%) turned in a respectable performance, but the sector's light weighting in the S&P 500 prevented it from having a broader impact. Energy was a close second, gaining 0.7%. However, the 1.9% surge in oil prices ($65.97/bbl) also gave the bulls little to get excited about.
The rate-sensitive Financials sector shrugging of another day of rising bond yields was among the day's more remarkable performances. The sector's 0.4% advance was not enough to offset late-day reversals in Technology, Health Care and Consumer Staples.
Tech was in focus ahead of a mid-quarter update from Texas Instruments (TXN 35.75 -0.22) and Apple's (AAPL 120.19 -4.30) much anticipated Worldwide Developers Conference. Apple, though, dropped 3.5% after failing to announce any new products.
NYSE Adv/Dec 1590/1702...Nasdaq Adv/Dec 1395/1638
