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Stock Market News for June 1, 2020

Benchmarks finished mostly higher on Friday after President Donald Trump’s press conference in response to China’s new security legislation turned out not to be as disruptive to trade and finance as investors had earlier feared. The Dow ended the session slightly lower weighed by losses from American Express and JPMorgan.

The Dow Jones Industrial Average (DJI) fell 17.53 points, or less than 0.1%, to close at 25,383.11 and the S&P 500 rose 0.5%, or 14.58 point to close at of 3,044.31. While, the Nasdaq Composite Index closed at 9,489.87, adding 1.3%, or 120.88 points. The fear-gauge CBOE Volatility Index (VIX) decreased 3.8%, to close at 27.51. Declining issues outnumbered advancing ones for 1.04-to-1 ratio on the NYSE and a 1.04-to-1 ratio on the Nasdaq favored advancers.

How Did the Benchmarks Perform?

Post Trump’s news conference the semiconductor stocks jumped sending the iShares PHLX Semiconductor ETF (SOXX) to its session high, helping it close 2.5% higher. The biggest gainers among them were Marvell Technology Group Ltd. MRVL and NVIDIA Corporation NVDA which closed 8.8% and 4.6% higher on Friday.

NVIDIA sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 and Dow were weighed by the financial stocks. Shares of American Express Company AXP and JPMorgan Chase & Co. JPM closed 3.1% and 2.6% lower, respectively on May 29. Shares of Twitter, Inc. TWTR and Facebook, Inc. FB also dropped 2% and 0.2%, respectively on Friday, as Trump signed an order threatening social media firms with new regulations over free speech on Thursday.

Overall, the S&P index recorded 17 new 52-week highs and no new lows. Meanwhile, Nasdaq recorded 60 new highs and 14 new lows.

Trump Comments on China, But no Actions on Trade Front

On Friday, President Trump in a news conference said that he would take action to eliminate special treatment towards Hong Kong. Investors eagerly awaited the news conference as tensions between China and the United States had risen as Trump criticized the Chinese government’s response to the coronavirus outbreak and now China increasing its stronghold over Hong Kong.

However, the news conference eased investors’ fear as the President did not indicate that U.S. would pull out of the phase one trade agreement reached with China post the pandemic. Easing trade concerns for the time being and helping trade-sensitive semiconductor stocks close higher.

Economic Data

On May 29, the Department of Commerce reported that consumer spending slumped 13.6% in April, higher than the consensus estimate of a 12.8% decline. However, personal income rose 10.5% due to increase in government social benefits in response to the COVID-19 pandemic.

The Chicago Purchasing Managers Index for May declined to 32.3, missing the consensus estimate of 39.6 and below the April’s value of 35.4. The index measures the economic health of the manufacturing sector in Illinois, Indiana and Michigan and any reading below 50 indicate worsening conditions.

The University of Michigan’s consumer confidence index rose to 72.3 in May from 71.8 in April, but is still below the consensus estimate of 74.2. The rise in consumer confidence was due to easing of lockdowns and reopening of the economy that boosted investors’ sentiment.

Weekly RoundUp

The Dow ended 3.8% higher for the week, while the S&P 500 gained 3%, and the Nasdaq closed 1.8% higher. Benchmarks recorded sharp gains for the week and month.

Equities rallied, lifted by optimism over the easing of lockdownsand historic stimulus efforts by the Federal Reserve and other central banks as well as fiscal measures by governments.

Monthly RoundUp

The Dow, the S&P 500 and the Nasdaq gained 4.3%, 4.5% and 6.8%, respectively in May. From April to May, the S&P 500 added 17.8%, its biggest two-month percentage gain since 2009. The broader index has bounced about 38% off its March low, however, it is about 10% below its record high set in February.

The markets have gained mainly from optimism about economic reopening, while investors had difficulty in gauging the coronavirus’ impact on corporate earnings. On the other hand, month end data on U.S. consumer spending showed a record drop for the second straight month as uncertainties surrounding the economy dampened consumers.

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JPMorgan Chase Co. (JPM): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
American Express Company (AXP): Free Stock Analysis Report
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