Stock Market News for Jun 4, 2021

Wall Street closed lower on Thursday as strong economic data failed to offset market participants' concerns about an impending inflation. Technology stocks suffered the most. All the three major stock indexes ended in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was down 0.1% to close at 34,577.04, ending a five-day winning streak. Notably, 17 components of the 30-stock index ended in the green while 13 in red. The tech-heavy Nasdaq Composite finished at 13,614.51, sliding 0.1% due to weak performance by large-cap technology stocks.

Meanwhile, the S&P 500 dropped 0.4% to end at 4,192.85.  The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) tumbled 1.2% and 0.9%, respectively. Notably, five out of eleven sectors of the benchmark index closed in the green while six in red.

The fear-gauge CBOE Volatility Index (VIX) was up 3.2% to 18.04. A total of 12.5 billion shares were traded on Thursday, higher than the last 20-session average of 10.8 billion. Decliners outnumbered decliners on the NYSE by a 1.45-to-1 ratio. On Nasdaq, a 1.41-to-1 ratio favored advancing issues.

Expectations of an Impending Inflation

Market participants remained concern that the U.S. economy will face inflationary pressure this year. The recently released core PCE price index and consumer price index have indicated this. Healthy consumer spending along with supply chain bottlenecks and shortage labor are generating both demand-pull and cost-push inflations.

Consequently, shares of big techs like Apple Inc. AAPL, Microsoft Corp. MSFT, Alphabet Inc. GOOGL and Facebook Inc. FB  were down 1.2%, 0.6%, 1% and 0.9%, respectively. Facebook sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

The Department of Labor reported that weekly jobless claims fell 20,000 to 385,000 for the week ended May 29 form downwardly revised 405,000 in the previous week. The consensus estimate was 391,000. This is the first time that weekly jobless claims fell below 400,000 since the week ended Mar 14, 2020, the last reported week before the impact of lockdown.

However, continuing claims (people already collecting state jobless benefits) increased 169,000 to 3.77 million for the week ended May 22.The number of Americans receiving benefits across all unemployment programs totaled 15.4 million for the week ended May 15, a decline of 366,000 from the previous week. However, this was a significant reduction from 30.8 million in the comparable week last year.

Automatic Data Processing Inc. (ADP) and Moody’s Analytics reported that private payrolls jumped to 978,000 in May compared with the consensus estimate of 680,000. However, April's data was revised downward to 654,000 from 742,000 reported earlier.

Large companies recruited 308,000 people, mid-sized businesses injected 338,000 jobs while small businesses hired 333,000 new employees. Services sector added 850,000 jobs while the goods producing sector recruited 128,000 people.

Leisure and hospitality jobs increased by 440,000, education and health services added 139,000 jobs, Trade, transportation and utilities recruited 118,000 people, construction industries added 65,000 new positions, Manufacturing jobs increased by 52,000, while mining added back 11,000 positions. Information industries lost 3,000 jobs.

The Institute of Supply Management (ISM) reported that its services sector purchasing managers' index (PMI) jumped to an all-time high to 64% in May from 62.7% in April. The consensus estimate was 62.5%. The services PMI grew 12 months in a row.

Notably, any reading above 50% means expansion in service sector while a reading above 60% is generally called exceptional. Prices sub-index climbed to a 13-year high of 80.6% from 76.8% in April. All 18 services industries reported growth in May.

The IHS Markit reported that the final reading of its U.S. services sector PMI hits an all-time high of 70.4% in May compared with 70.1% in the preliminary reading. April's reading was 64.7%.

The Department of Labor reported that the U.S. productivity growth was unrevised at 5.4% compared with a steep decline of 3.8% in fourth-quarter 2020. However, the consensus estimate was 5.6%. Unit labor cost rose to 1.7% from an initial estimate of 1.6%.

Stock That Have Made Headline

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