Markets eked out gains on Thursday, reversing earlier losses as bond yields sprung back up as Treasury prices declined. Meanwhile, a Chinese diplomat stated to a group of reporters in China that his country was not “afraid of a trade war.” The three major benchmarks ended in the green.
The Dow Jones Industrial Average (DJI) increased 0.2%, to close at 25,169.88. The S&P 500 increased 0.2% to close at 2,788.86. The tech-laden Nasdaq Composite Index closed at 7,567.72, gaining 0.3%. The fear-gauge CBOE Volatility Index (VIX) increased 8% to close at 19.33. Advancers outnumbered decliners on the NYSE by a 3.25-to-1 ratio. On Nasdaq, a 2.48-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow rose 43.5 points to close in the green. Gains for the 30-stock index were broad based and was supported by a rally in the shares of McDonald's MCD and Coca-Cola KO, which gained 1.6% and 1.3%, respectively. Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 5.8 points to end in positive territory. Of the 11 major sectors of the S&P 500, eight ended in green, with consumer discretionary and technology stocks leading the advancers. The Consumer Discretionary Select Sector SPDR Fund (XLY) and Technology Select Sector SPDR Fund (XLK) increased 0.7% and 0.6%, respectively on Thursday.
Meanwhile, the Nasdaq increased 20.4 points to close in the red. Shares of Keysight Technologies KEYS rallied 11.3% and supported gains for the Nasdaq.
Treasury Yields Edge Up
The yield on the 10-year note managed to rise 3 basis points to settle at 2.27% after Treasury prices fell on Thursday. This boosted gains for the broader markets. A rally in global bonds weighed on yields on May 29. This resulted in Long-term government debt yields falling below that on short-term notes and bills.
While, the 3-month bill yield increased to 2.362%, the yield on 10-year Treasury note fell to 2.26%, its lowest level since Sep 2017. As a matter of fact, the yield curve inversion between 3-month Treasury bill and the 10-year Treasury note increased to its highest levels since the financial crisis.
China Not Shying Away from a Trade War
At a news conference in Beijing on May 30, China’s vice foreign minister Zhang Hanhui told a group of reporters that while the country is against the trade tensions but wouldn’t shy away from a trade war. He also termed the current situation between both the countries as an act of “naked economic terrorism, economic chauvinism, economic bullying.” Zhang’s comments weighed on the investor sentiment.
On the economic data front, then U.S. Department of Commerce lowered the initial estimate of the first quarter 2019 GDP to 3.1% from 3.2% earlier.
Meanwhile, the Commerce Department also released its monthly advance economic indicators report for April. The report stated that the U.S. trade deficit increased to $72.1 billion from $71.9 billion in the month. While exports declined 4.2% in the month, the imports dropped 2.7%. This resulted in widening of the trade deficit in the April.
Pending home sales for April fell 1.5% from the previous month. Finally, the initial jobless claims for the last week increased to 215,000 claims.
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