Afternoon Market Briefing 2nd of July 2019

Cyclical Sectors Lag at Midday

The Dow (-0.2%), Nasdaq (-0.3%), and S&P 500 (-0.2%) trade just below their flat lines at midday while the Russell 2000 (-0.7%) underperforms.

With the Independence Day Holiday looming on Thursday and a shortened session set for tomorrow, today’s trading volume has been on the light side. The S&P 500 spent the early portion of the session just above its flat line, but the past two hours have seen a slow slide to fresh lows. All in all, the benchmark index has spent the first half of the session in a 14-point range.

Chipmakers were among yesterday’s standouts, and today the group is standing out for a different reason. The PHLX Semiconductor Index is down 1.7%, trimming this week’s gain to 0.9%. The index has been pressured by losses in all 30 components, with 24 out of 30 down at least 1.0%.

The broader technology sector (-0.3%) trades a bit behind the broader market while most other cyclical groups also sit in negative territory. Financials (-0.6%) have been pressured by a slide in longer-dated yields, which has deepened the inversion in the spread between the 3-month bill yield and the 10-yr note yield to 22 bps.

The energy sector (-1.8%) has been today’s weakest performer amid a 3.4% drop in the price of crude to $57.11/bbl.

Today’s corporate news flow has been very light, but it is worth noting that rail car manufacturer, Greenbrier (GBX 28.60, -2.25, -7.3%), is down after missing Q3 estimates and guiding Q4 results below expectations. Elsewhere, Amarin (AMRN 21.76, +2.52, +13.2%) has climbed after issuing above-consensus guidance for Q2 and FY19.

U.S. Treasuries trade comfortably higher with the 10-yr yield down six basis points at 1.98% after setting a fresh low for the year in recent trade. Treasuries and gold (+1.4% to $1409.10/ozt) have rallied after NBC reported that Vice President Mike Pence was called back to Washington just before his plane was about to touch down in New Hampshire. This was followed by an unconfirmed report that the European Commission called a meeting of its security council.

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