Stock Market News Today: Markets end in the red as big rally takes a breather

After a strong rally that has seen the benchmark S&P 500 (SP500) and the tech-heavy Nasdaq Composite (COMP.IND) post six-day win streaks, Wall Street took a beat on Friday, with the major averages closing in the red.

However, it was a strong weekly performance for U.S. stocks, with the S&P adding 2.58% and notching a five-week win streak. The Nasdaq advanced 3.25%, as technology names continued to march higher and add to their 2023 runup. The blue-chip Dow (DJI) rose 1.25%.

Looking at today’s performance, the Nasdaq closed out the session with a loss of 0.68% to settle at 13,689.57 points, while the blue-chip Dow (DJI) slipped 0.31% to end at 34,300.76 points. The S&P was lower by 0.36%, finishing at 4,409.74 points.

Eight of the 11 S&P sectors ended in negative territory, led by Communication Services and Technology. Utilities topped the gainers.

Treasury yields were higher. The longer-end 10-year yield (US10Y) was up 4 basis points to 3.77% while the 2-year yield (US2Y) – which is more rate-sensitive to the Fed’s moves – was up 8 basis points to 4.73%. Meanwhile, the dollar index (DXY) was higher by 0.21% to 102.32.

On Thursday, markets finished with hefty gains. Investors have appeared to overlook the Federal Reserve’s signal that further rate hikes are on the cards. Market participants have instead bolstered their expectations that the central bank will have to end its aggressive tightening cycle sooner rather than later.

“Each of the four major equity indices – the S&P 500 (SP500), the Nasdaq 100 (NDX), the Dow (DJI) and the Russell 2000 – hit key short-term resistance levels today and failed to break through to the upside,” Alex King, investing group leader of Cestrian Capital Research, told Seeking Alpha.

“We believe there will be a temporary sell-down in each of the indices in the coming days as a function of, inter alia, dealer rebalancing as call options expire (meaning dealers will be selling stock to unwind their long hedges). Also for the highly technical reason that it has all run up a bit too much and needs to cool off,” King added.

The Nasdaq Composite (COMP.IND) on Friday was weighed down by a retreat in chipmakers, after Micron Technology (MU) warned that about half of its revenue from China is at risk of being lost. Meanwhile, Advanced Micro Devices (AMD) was also lower. Morgan Stanley analysts bumped the firm from its top pick, replacing it with NVIDIA (NVDA).

“The Nasdaq could sell down quite some way and still be on a bull track to new all time highs, but we anticipate many victorious bear growls should we see any sequential down days in Big Tech. We continue to look towards new all time highs during 2023/4, in all four major indices,” Alex King added.

Turning to the economic calendar, the University of Michigan’s gauge of consumer sentiment in June came in higher than expected. Moreover, year-ahead inflation expectations came in at +3.3%, much lower than the anticipated +4.4% figure.

“Sentiment is improving, albeit at still-depressed levels. We think the bigger story in today’s University of Michigan survey is the fact that inflation expectations are rolling over,” Wells Fargo’s Tim Quinlan said.

Turning to active stocks, Adobe (ADBE) ended as the top percentage gainer on the S&P 500 (SP500) after the design software maker reported a beat-and-raise quarter. Analysts were also positive over its artificial intelligence prospects.

Virgin Atlantic (SPCE) shares took off after the company said it would start commercial spaceflight operations later this month.

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