The major U.S. equity averages finished the shortened trading session due to tomorrow’s Independence Day to the upside. The U.S. stock market closed at 1 p.m. today. It will reopen on Friday for a full session.
Wednesday was a volatile day as traders squared positions before the holiday and Friday’s job market data. Stocks began on a lower note as global events such as political unrest in Egypt and Portugal and disappointing economic data out of China and the Eurozone injected a degree of uncertainty into the market.
Equities fought back from opening losses with technology pacing the advance. The sector ended with a gain of 0.6% as large components like Apple and Oracle provided notable support. The discretionary sector also outperformed the broader market, and homebuilders displayed broad strength. On the downside, the renewed sovereign debt concerns pressured the financial sector, which ended lower by 0.4% after spending the entire session in the red.
Political events around the world are having impacts on global economies and the equity markets. In Egypt, military ousted President Mohamed Mursi from power after he failed to answer the demands of protesting crowds within the timeframe specified by the country’s armed forces. The constitution was also suspended. The military announced an early presidential election in a bid to resolve the political crisis that has polarized the nation. And that is not all.
Portugal returned to headlines after two key government officials (finance and foreign ministers) submitted their resignations. In addition, reports indicate two more ministers (agriculture and social security) are set to follow suit. As a result, the country’s benchmark 10-yr yield spiked 85 basis points to 7.31%. The concerns regarding the country’s future spilled over to other peripheral economies.
And finally, world economy got another dose of lackluster Chinese economic data. China’s non-Manufacturing PMI Index, a gauge of business activity in the services sector, declined from 54.3 to 53.9 in June, and the lowest level since September 2012.
In U.S. economic news, the ISM Non-Manufacturing Index slipped 1.5 points in June to 52.2, the lowest level since February 2010, and contrary to expectations for a small uptick to 54.0.
Moreover, there is a huge widening in the trade gap. Trade deficit widened by $4.9 billion in May, the most in two years, to $45.0 billion On the other hand, private nonfarm employment rose 188,000 in June according to ADP, the most in four months, and above the consensus of 160,000. Initial claims for unemployment insurance fell 5,000 last week to 343,000, below the consensus of 350,000.
Trend wise, there was not much change from yesterday with our Trend Tracking Indexes (TTIs) meandering with the major indexes. The Domestic TTI closed at +1.38%, while the International TTI ended up at +3.41%.
I will update this week’s StatSheet with today’s closing prices and post it tomorrow morning. Have a Happy 4th of July!