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US stocks lost some momentum on Thursday after the benchmark S&P 500 index (SP500) surpassed the 5,500-point milestone for the first time in history. Market participants, returning from a midweek holiday on June 16, looked at a busy economic calendar and some actions by global central banks.
Nvidia (NVDA) continued to steal much of the attention, with the chip giant arriving Thursday as the largest new publicly traded company by market capitalization.
Shortly after the opening bell, the S&P (SP500) crossed the 5,500 level and hit a session high of 5,505.53. it was the last one up to 0.09% to 5,491.82 in midday trading. The tech-heavy Nasdaq Composite (COMP: IND) recorded a new intraday record and was the last higher by 0.02% to 17,866.34 points. The blue-chip Dow (dji) rose 0.23% to 38,923.12 points.
Of the 11 S&P sectors, six were in the green.
After a string of record closes, some buyer exhaustion appears to be seeping into Wall Street. According to BTIG, the Invesco QQQ Trust Series 1 (QQQ), a popular market-tracking exchange-traded fund with nearly $300 billion in assets under management, is showing signs of being overbought.
stocks' gains on Thursday were also capped by a rise in U.S. Treasury yields. The 30-year yield (US30Y) rose 5 basis points to 4.41%, while the 10-year yield (US10Y) rose 4 basis points to 4.28%. The more rate-sensitive short-term 2-year yield (US2Y) rose 2 basis points to 4.75%.
The selling action in the fixed income market came after two major central banks issued their latest interest rate decisions. The Swiss National Bank cut its official interest rate for the second consecutive meeting, consolidating itself as a leader in the global cycle of monetary policy easing.
Elsewhere, the Bank of England appeared to disappoint some traders after keeping its policy rate at a 16-year high despite a recent drop in inflation.
See live data on how Treasury yields are performing across the curve on the Seeking Alpha bonds page.
At home, a busy economic schedule ended up showing indicators that supported the case for the Federal Reserve to cut interest rates.
Before the start of regular operations, the US Census Bureau reported a 5.5% monthly drop in May housing starts to 1.277 million, well below the consensus of 1.373 million. Meanwhile, construction permits decreased 3.8 million/month to 1.386 million, also below the estimate of 1.45 billion.
“Housing Starts were weak in May. They tend to correlate well with S&P returns, but Starts tell a different story about the economy than stocks. Until recently, I felt that Starts legitimized the rally despite their tightness (i.e. I didn't think it was all ai, as some argue),” said Francois Trahan, founder of The Macro Institute and Trahan Macro Research, on x (formerly twitter).
“Outputs COULD always be revised higher next month, but this divergence will have to close one way or another. Interesting stuff anyway,” Trahan added.
The number of Americans filing initial jobless claims last week fell from a nine-month high to 238,000, but still beat the forecast of 235,000. Additionally, the Philadelphia Federal Reserve's monthly survey showed that manufacturing activity in the region remained broadly stable overall.
Finally, the Atlanta Federal Reserve said business inflation expectations were unchanged at 2.3% in June.
As for active movers, Nvidia (NVDA) advanced about 2%, providing some support to the markets. The chipmaker ended Tuesday's trading session as the world's largest company. Investors continue to flock to the stock with an eye on massive demand for the company's artificial intelligence chips.
“The market capitalization of NVIDIA's NVDA stands at $3.42 trillion, more than $100 billion more than Apple's AAPL and Microsoft's MSFT today,” Bespoke Investment Group noted in x.
Deutsche Bank highlighted that Nvidia (NVDA) was now larger than all stocks listed in Germany, the United Kingdom and France combined.
