Stocks ended a three-session skid on Wednesday as a heap of corporate news served to distract investors from escalated U.S.-China trade tensions. The Nasdaq and the Russell 2000 rallied to new record highs, adding around 0.7% apiece, and the S&P 500 ticked up 0.2%. The Dow underperformed though, shedding 0.2%.
Walgreens Boots Alliance (WBA 68.00, +3.39) will be joining the Dow Jones Industrial Average on June 26, taking the spot of General Electric (GE 12.88, -0.07), which was one of the original Dow components and has been a continuous part of the average for more than a century. The decision follows a disastrous 18-month stretch for GE shares, which have dropped around 60% since the end of 2016.
Media names returned to the spotlight on Wednesday after Walt Disney (DIS 107.15, +1.05) increased its offer for 21st Century Fox's (FOXA 48.08, +3.37) entertainment assets. Disney is now offering $35 per share, up from $28 per share and better than last week's offer from Comcast (CMCSA 33.39, +0.58) of $35 per share. Fox shares surged 7.5%.
Elsewhere, Oracle (ORCL 42.82, -3.45) shares dropped 7.5% to a 15-month low after the company's quarterly update provided less insight than usual into its growing cloud business. Meanwhile, shares of Starbucks (SBUX 52.22, -5.21) tumbled 9.1% to a 20-month low after the coffee giant announced it will be scaling back store growth and closing underperforming urban locations.
Most S&P 500 sectors finished in the green, but gains were pretty modest; other than real estate (+1.1%), no group added more than 0.5%. The consumer discretionary (+0.5%) and energy (+0.4%) sectors were the top-performing groups, but the top-weighted technology sector (+0.3%) also had a relatively solid showing. Within the tech space, shares of Facebook (FB 202.00, +4.51) jumped 2.3% to a new all-time high, helped by reports that its photo-sharing subsidiary Instagram has reached 1 billion monthly users.
At the opposite end of the sector standings, the heavily-weighted financial space ended lower by 0.3% even though the 2s-10s spread widened, rebounding from its lowest level in a decade. The yield on the benchmark 10-yr Treasury note advanced four basis points to 2.93% while the 2-yr yield climbed two basis points to 2.57%. The telecom services sector was the worst-performing group with a loss of 1.0%.
Outside of equities, West Texas Intermediate crude futures rallied on Wednesday, rising 1.3% to $65.71 per barrel, after the Department of Energy reported that U.S. crude stockpiles decreased for the second week in a row, declining by 5.9 million barrels. The U.S. Dollar Index ticked up 0.1% to 94.73.
Reviewing Wednesday's economic data, which included the Existing Home Sales report for May, the Current Account Balance for the first quarter, and the weekly MBA Mortgage Applications Index:
- Existing home sales decreased 0.4% in May to an annualized rate of 5.43 million units (Briefing.com consensus 5.55 million). The April reading was revised to 5.45 million (from 5.46 million).
- The key takeaway from the report remains the same: notable supply constraints continue to act as a drag on overall sales. The limited inventory -- and the high prices on available inventory -- is crimping affordability, particularly for first-time buyers; moreover, all prospective buyers are feeling affordability pressures from rising mortgage rates and home prices rising faster than income.
- The current account deficit for the first quarter totaled $124.1 billion (Briefing.com consensus -$129.2 billion). The fourth quarter deficit was revised to $116.1 billion from $128.2 billion.
- The weekly MBA Mortgage Applications Index rose 5.1% to follow last week's decline of 1.5%.
On Thursday, investors will receive the weekly Initial Claims report (Briefing.com consensus 220K), the Philadelphia Fed Index for June (Briefing.com consensus 27.0), the FHFA Housing Price Index for April, and the Conference Board's Leading Economic Index for May (Briefing.com consensus +0.4%).
- Nasdaq Composite +12.7% YTD
- Russell 2000 +11.2% YTD
- S&P 500 +3.5% YTD
- Dow Jones Industrial Average -0.3% YTD