Market Recap: Thursday, June 4

On Thursday, stocks ended mostly lower, with the Dow Jones Industrial Average eeking out its fourth straight daily gain ahead of May jobs report. In the S&P 500, the financials and industrials sectors led advances, and tech stocks held steady after paring some of their recent weeks’ worth of strong gains the prior session.

Video Transcript

SEANA SMITH: Welcome back to The Final Round here on Yahoo Finance. I'm Seana Smith. We are less than a minute away from the closing bell on Wall Street today. Stocks extending their losses into the close today. We have all three of the major averages in the red, although, well off the lows.

The Dow, the S&P, and the NASDAQ, all moving to the downside. The NASDAQ, the worst performer of the three major averages, this afternoon off nearly 8/10 of a percent. We're also seeing the S&P in the red off about a half of a percent today. It's interesting once you look into the sectors, the action that we are seeing in that. Today, utilities, which has been an outperform recently, is the biggest laggard with that sector of over 2% today.

We're also seeing some weakness in real estate and the communications services sectors. Those three sectors are the worst performers this afternoon. Nine of the 11 S&P sectors are trading in the red as we head into the closing bell. The only gainers today, financials and industrials. Financials, we've been talking about, has been an odd performer, continues to--

[BELL RINGING]

And that was the closing bell on Wall Street. It looks like we are still shaking out the close of today. S&P and NASDAQ, though, for sure, closing the day in the red, like I said, and the NASDAQ. The biggest loser today-- we haven't even mentioned the econ data that we got out this morning or some of the data that investors were closely watching. And that was a jobless claims number. 1.8 million more Americans filing for jobless claims last week, and that continuing claims number higher than expected at 21.5 a million.

Really pointing to the fact that it's taking a little bit longer for some of those workers to have been laid off to return to work. I want to bring in my co-host Myles Udland, and Myles, it's interesting. We've had this huge rally so far this week really starting the month of June on a pretty high note. Today, investors are taking a little bit of a breather, but there's not really a clear reason as to why we're seeing this break in the rally.

MYLES UDLAND: Well, no, and I think the most important thing that we've seen in the market this week is what's happening in financials. And as you mentioned, one of the two sectors that were higher on today's session was the financial sector. XLF was up more than 1%, and you look at the KBW bank index. That's up nearly 4% on today's session. So I think, again, as you mentioned, the data continues to be terrible to use a conservative adjective there.

But overall-- and we just discussed this with Keith [INAUDIBLE]-- the idea that the worst is happening and that in the future, even if things are bad, they will be less bad than they are today.

The market hasn't moved off that position, so yes, we're going to see an unemployment rate that we haven't seen in 90 years tomorrow. But that doesn't really change what the market has already baked in and moved on from. And it's a weird thing to hit on every day. But you look at the setup from the market, the strength we've seen internally, and the fact that banks continue their climb higher. The market is saying that this reopening is probably going to go well, and the economy is going to impress as we move into the second half of the year.

SEANA SMITH: Yeah, and I think that's exactly right. And to bring Yahoo Finance Editor and Chief Andy Serwer into the conversation. Andy, it's interesting. Because, like Myles was just saying, it seems like the market is in the midst of this V shaped recovery. And it's hard to find people in the business world that believe that it's hard to find, even the economic data to back it up, at least, on the economy side of it.

ANDY SERWER: Yeah, I mean, it's just really shocking, I guess, almost, Seana. I mean, just here it is in a nutshell, right? The stock market is at a record high for all intensive purposes, record high. And as Myles just said, the economy is at a record low, and neither one of those points are exaggerations really at all, at all.

And it is just very, very hard to square that, and you know, you see a little profit taking today. And you're like, well, people are-- And by the way, this is not lost on anything. I mean, this disconnect is being screamed from the tree tops. And you know, you hear a lot about, oh, the billionaires are just completely disconnected from the rest of us, or at least the shareholder class. And obviously, that's true.

You know, it's hard to explain. Obviously, the market indexes are carried to a great degree by companies that are doing OK or even benefiting from this crisis. But you know, overall, something's got to give here, Seana. And it could well be, best case scenario, that the giving is the economy recovering a little bit faster than we thought, which would sort of justify the valuations.

And there's a lot of craziness. I mean, Amazon's up 30% since the March low, right? Just imagine that market capitalization, and then another one I love is today, American Airlines is up 40% in a day. So there's a lot of craziness out there, a lot.

SEANA SMITH: There is a lot of craziness out there, and then we haven't even brought up-- and Rick, I know, I always go to you on this. But it's so relevant today, and that's the political risk. We got the understatement from Mattis, yesterday, Snap, we all heard this after the bell. Snap no longer promoting President Trump. Esper, also, at odds with Trump, although, he did walk back some of his initial comments. And also, what a Biden win could potentially mean for the market. Yet, we're still seeing these significant gains with the S&P up, what? Over 30%, up 37% in the last 50 days alone.

- Yeah, and I guess the real political risk for the markets. I mean, sad to say, the markets don't really care about riots, or civil unrest, or even looters for that matter. The markets should care about Joe Biden apparently taking a lead over President Trump, because he does favor policies that we would be pretty different from President Trump.

Trump has been considered basically good for markets, I think, with the exception of his trade war against China, and Biden's policies on paper would be a little less friendly to a markets. Because he wants to raise the corporate tax rate and a few other things like that. I don't think he's going to raise the corporate tax rate, if he wins, at least, not within the first couple of years. Because you can't raise taxes in the middle of a recession, which we're still going to be in.

But to Andy's point about the massive disconnect between the stock market and the real economy, I think, the Federal Reserve is just carrying the stock market at this point. I think that's basically what it comes down to. I think investors think the Fed is just going to solve every problem.

I mean, basically, at this point, investors seem willing to believe that the Federal Reserve has superpowers and that it can just stop bad things from happening. I don't think that's entirely true, because one thing the Fed cannot do is create demand. They cannot make people spend money. They can not make businesses spend money. They can put a lot of Band-Aids on the economy, though, and they have.

SEANA SMITH: Yeah, they certainly have, and we'll also got the reading tomorrow. It's jobs eve day tomorrow. We'll get the big jobs report ahead of the bell tomorrow. And if it's any indication just in terms of what we got from the private payroll number, and also, the jobless claims number today, it seems like the jobs market, at least, isn't improving significantly yet. So more stimulus might be needed here down the road.