[BRIEFING.COM] In a manner of speaking, the stock market closed the second quarter on a boring note as the major indices stuck to a very narrow trading range from the sound of the opening bell. The directionless market was a by-product of many participants going into vacation-mode shortly after a key inflation report at 08:30 ET provided an all-clear signal to go out and enjoy the weekend.
The report we are referring to is the core-PCE deflator, a component of the personal income and spending report. Its importance to the market is anchored in the understanding that it is a closely-watched inflation gauge for the Federal Reserve. The report covered the month of May and showed a 0.2% increase in the deflator that was right in-line with the market's expectations. Although the monthly figure left the year-over-year change at 2.1% - the upper end of the Fed's forecasted inflation range - it was viewed with a sense of relief that it wasn't worse than expected.
That relief was evident in the futures market, which ticked up in its wake and set the stage for a positive start for stocks. Another supportive factor in the early-going was news that Renault and Nissan are interested in a partnership alliance with General Motors (GM 29.79, +2.35) that would entail the foreign auto makers taking a 20% stake in GM. The market clearly liked the implications of such a happening, but the only response from GM's board was that it will take the matter under advisement.
Beyond those two items, the market found little of interest. It all but ignored lower-tier economic releases that included the revision to the Univ. of Michigan Consumer Sentiment Survey and the Chicago Purchasing Manager's Index that saw its prices paid component hit an 18-year high.
A relatively weak showing from the technology sector (-0.91%), which was driven by declines in the semiconductor group and Apple Computer (APPL 57.27, -1.70), which got clipped on concerns about its stock option grant practices, weighed on the broader market throughout the session. A lackluster showing from the financial sector (-0.42%) also acted as an influential drag that prohibited the blue chip averages from extending Thursday's gains.
Friday's trade, however, wasn't devoid of winners. Commodities, led by gold (+$27.80 to $616.70/ounce) and other base metals, rose 1.20%. Meanwhile, the outperformance of small-cap and mid-cap issues limited today's losses. The Russell 2000 was the standout performer on the day, tacking on 1.40%. On a related note, today marked the annual rebalancing of the Russell indexes, which led to a pickup in volume late in the session and was the main force behind a late slide in the indices.
Separately, the Treasury market put together a stealth rally as an improved view of the inflation outlook, end of quarter activity, and safe-haven buying ahead of what will be a long weekend for many helped the benchmark 10-year note gain 13 ticks, bringing its yield down to 5.14%. That is roughly 10 basis points below where it was at Wednesday's close. The drop in long-term rates didn't do much to help the homebuilding stocks Friday, but overall, it is a supportive development for the equity market.
As a reminder, the stock market will be open on Monday, but it will close at 1:00 pm ET in observance of the Fourth of July holiday. Trading will then resume on Wednesday, July 5. NYSE Adv/Dec 2274/1048...Nasdaq Adv/Dec 1733/1313
DOW Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)