Tech Stocks In Favor Again After Two Economic Reports Lift Sentiment

Barry Adams
27 Jun, 2023
New York City

Stocks turned higher after falling sharply on Monday and investors digested the latest economic data. 

Market indexes advanced after durable goods orders rose unexpectedly and capital goods orders, an indicator of business spending, also expanded suggesting a resilient economy. 

New home sales also advanced despite elevated mortgage rates and home prices, but buyers stepped up to acquire new homes in all regions of the United States. 

Tech stocks lifted market indexes after Meta Platforms extended this year's gains on the expectations of higher advertising revenues. Walgreens turned lower after the company lowered its full-year outlook. 

In overseas trading, the European Central Bank president Christine Lagarde reiterated the central bank's commitment in lowering inflation to 2% and continuing aggressive rate hikes. 

But crude oil turned lower on the demand growth worries after weak economic rebound in China following the ending of Covid-lockdowns. 

The Chinese premier said second-half economic growth is estimated to be faster than the expansion in the first-half but failed to provide specific measures. 

 

Durable Goods Orders Accelerated In May 

Durable goods orders rose more than expected and new home sales also advanced. 

Durable goods orders expanded in May 1.7%, faster than 1.2% in April, the Commerce Department reported Tuesday. 

Excluding transportation equipment orders, durable goods orders rose 0.6% in May after dropping by a revised 0.6% in April.

Excluding defense orders, which declined 14.7%, durable goods orders rose 3%.  

 

New Home Sales Jumped In May 

New home sales jumped 12.2% to 763,000 on a seasonally adjusted basis, U.S. Census Bureau reported Tuesday. 

The annual rate jumped to a high not seen since February of last year and increased 20% from a year ago when the annual rate estimate was 636,000. 

The median sales price of new houses sold in May was $416,300 and the average sales price was $487,300 compared to $450,700 and $521,500 respectively a year ago. 

Home sales in the Northeast increased 17.6% to 40,000, in the West rose 17.4% to 175,000, in the Midwest increased 4.1% to 77,000 and in the South jumped 11.3% to 471,000. 

 

U.S. Indexes & Yields 

The S&P 500 index increased 1.1% to 4,380.21 and the Nasdaq Composite rose 1.7% to 13,559.48.  

The yield on 2-year Treasury notes increased to 4.69%, 10-year Treasury notes inched lower to 3.71% and 30-year Treasury bonds edged down to 3.82%. 

Crude oil decreased $1.94 to $67.40 a barrel and natural gas prices decreased 3 cents to $2.75 a thermal unit. 

 

U.S. Stock Movers

Lordstown Motors Corp plunged 33.8% to $1.79 after the U.S. electric truck maker filed for bankruptcy protection. 

Separately, the company also sued Taiwan-based Foxconn for a financing deal that fell apart. 

Walgreens Boots Alliance Inc dropped 8.9% to $28.97 after the pharmacy retail chain reported lower-than-expected fiscal third quarter earnings. 

The company  also lowered its full-year earnings outlook.  

Home builders continued it extend gains after new home sales rose more than expected in May. 

PulteGroup, Inc advanced 2.7% to $78.06, Toll Brothers added 2.5% to $77.80 and NVR Inc gained 2% to $6,270.11. 

Energy stocks were in focus after crude extended this year's loss. 

Exxon Mobil decreased 0.4% to $103.05, Chevron Corp declined 0.1% to $153.99 and Hess Corp fell 0.8% to $133.99. 

Tech stocks were under pressure on the persistent worries of rate hike at the next meeting. 

Meta Platforms increased 2% to $284.07, Alphabet Inc declined 0.6% to $116.95 and Microsoft Inc increased 0.3% to $330.85. 

Google's parent Alphabet was under pressure after UBS and Bernstein downgraded the stock on the worries of rising competition from AI-powered chat bots. 

 

European Markets In Choppy Trading Closed Higher 

European markets erased morning gains after rate hike worries resurfaced but managed to rebound following the advance in New York. 

Major averages in Paris and Frankfurt turned lower after European Central Bank President Christine Lagarde reiterated the central bank's commitment in lowering inflation to 2%. 

The European Central Bank will continue to increase rates at the next meeting in July, barring any material geopolitical event, Lagarde reiterated her stance. 

President Lagarde said at the ECB Forum that inflation is too high and rates are likely to go higher and it is too early to predict peak rates. 

Market sentiment sapped after hawkish comments from Lagarde but earlier in trading indexes advanced on the hopes of more targeted stimulus announcement from Chinese leaders. 

Resource stocks advanced before erasing most of the session's gains and auto sector stocks turned lower but financial services and banks traded higher.

 

Europe Indexes & Yields 

The DAX index increased 0.2% to 15,846.86,  the CAC-40 index added 0.4% to 7,215.58 and the FTSE 100 index gained 0.1% to 7,461.46.

The yield on 10-year German Bunds inched lower to 2.29%, French bonds traded lower to 2.83%, the UK gilts edged down to 4.31% and Italian bonds decreased to 3.94%.

The euro edged higher to $1.09, the British pound to $1.273 and the U.S. dollar fetched 89.42 Swiss cents.

Brent crude decreased $2.13 to $72.08 a barrel and the Dutch TTF natural gas increased €2.53 to €34.53 per MWh.

 

Europe Stock Movers

Resource stocks were in focus on hopes that China will offer more targeted stimulus measures to revive faltering economic recovery soon. 

However, fears of higher rates also negatively impacted the metals and mining sector stocks. 

Antofagasta Plc declined 0.4% to 1,464.50 pence and Glencore plc dropped 0.2% to 436.55 pence. 

Wise Plc soared 633.20 pence after the company reported a surge in profit in the financial year ending in March. 

Prosus NV increased 5.5% to €66.49 and Naspers Limited jumped 8.3% to €31.60 after the company received an approval from South African regulators to eliminate cross holding structure. 

Sanofi SA declined 0.4% to €53.50 despite the drugmaker reporting positive results from its phase 2B study of Amlitelimab in adults with moderate-to-severe Atopic Dermatitis, a condition that causes dry, itchy and inflamed skin. 

JD Sports Fashion Plc declined 5.6% t0 138.40 pence after the specialty retailer reported a slowdown in sales in May. 

Porsche Automobil Holding SE declined 1.4% to €53.50 and the company signed a 5-year revolving credit for €2.5 billion to improve its liquidity position.