(Bloomberg) — A rally that drove stocks to all-time highs wavered as Wall Street traders weighed mixed economic reports for clues on the Federal Reserve’s next steps.
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Equities had a hard time finding direction after the S&P 500 approached 5,500, spurring calls for a technically overbought market. A drop in most tech megacaps weighed on trading. Treasuries edged up. Swaps continued to price in less than two Fed rate cuts this year.
US industrial production increased in May, helped by a broad-based pickup in factory output. Separate figures showed retail sales barely rose and prior months were revised lower, suggesting greater financial strain among consumers.
“So far, the economy could pull off a soft landing, especially if the Fed is quick to adjust policy as conditions change,” said Jeffrey Roach at LPL Financial.
Fed Bank of New York President John Williams told Fox Business the US economy is “moving in the right direction,” but declined to say when he would favor a rate decrease. He’s among the several officials on schedule to talk Tuesday.
The S&P 500 hovered near 5,480. Treasury 10-year yields declined three basis points to 4.25%. Traders also geared up for a $13 billion US sale of 20-year bonds. Around 10 borrowers are considering new bond sales in the high-grade primary market ahead of Wednesday’s US holiday.
Global investors are likely to keep pumping money into record-hitting stock markets, according to a survey by Bank of America Corp.
Answering a question about the asset class that would benefit most from a reallocation of money-market funds, 32% of respondents opted for US stocks. Another 19% said the cash would go into global equities, while a quarter of the respondents indicated they would buy government bonds.
There’s not much doubt in the market right now to curb the enthusiasm about the US stock rally driven by a small group of tech stocks. But some investors are increasingly looking for the ways to hedge the concentration risk. The “Magnificent Seven” megacaps have contributed more than 60% to the S&P 500’s return this year.
The benchmark has reached an overbought territory, but stock market breadth remains very narrow with only 46% of stocks trading above their 50-day moving averages. The relative strength index, or RSI, spread between market cap and equal-weighted S&P 500 is at its widest since at least 1990.
Corporate Highlights:
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Nvidia Corp. insiders have sold shares worth more than $700 million this year as the stock continues to push deeper into record territory amid unrelenting demand for its chips.
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Fisker Inc. filed for bankruptcy on Monday, months after the electric-vehicle startup stopped production of its only model, the oft-malfunctioning Ocean SUV.
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A Boeing Co. quality inspector alleged that the planemaker mishandled and lost track of hundreds of faulty parts, some of which he said may have been installed on new 737 Max planes, the latest revelation by a whistleblower pointing out possible misconduct at the manufacturer.
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Homebuilder Lennar Corp. reported better-than-expected orders, but its forecast for deals in the current quarter missed analysts’ estimates.
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Philip Morris International Inc. stopped online sales of its popular nicotine pouch brand Zyn in the US after receiving a subpoena in the District of Columbia related to flavored products that are banned there.
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NextEra Energy Inc., one of the world’s biggest renewables developers, is planning to sell $2 billion of equity to raise money for new energy projects and to pay down its short-term debt.
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Best Buy Co. is gearing up for one of the biggest product launches of the year: artificial-intelligence computers.
Key events this week:
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UK CPI, Wednesday
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US Juneteenth holiday, Wednesday
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China loan prime rates, Thursday
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Eurozone consumer confidence, Thursday
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UK BOE rate decision, Thursday
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US housing starts, initial jobless claims, Thursday
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Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
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US existing home sales, Conf. Board leading index, Friday
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Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 was little changed as of 10:57 a.m. New York time
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The Nasdaq 100 fell 0.2%
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The Dow Jones Industrial Average fell 0.1%
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The Stoxx Europe 600 rose 0.6%
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The MSCI World Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro was little changed at $1.0739
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The British pound fell 0.1% to $1.2692
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The Japanese yen fell 0.1% to 157.95 per dollar
Cryptocurrencies
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Bitcoin fell 2.5% to $64,696.38
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Ether fell 3% to $3,408.42
Bonds
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The yield on 10-year Treasuries declined three basis points to 4.25%
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Germany’s 10-year yield was little changed at 2.41%
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Britain’s 10-year yield declined five basis points to 4.07%
Commodities
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West Texas Intermediate crude rose 1.2% to $81.30 a barrel
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Spot gold rose 0.2% to $2,323.69 an ounce
This story was produced with the assistance of Bloomberg Automation.
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