We started the trading week in today’s pre-market with a disparity among major indexes: the Dow was down while the Nasdaq was up, with the S&P 500 splitting the difference, flat. That disparity only grew wider as regular trading commenced; the Dow fell 428 points at its session low, though closed -205 points, -0.59%. The S&P 500 dipped 0.20% on the day, while the Nasdaq grew +0.17%. The small-cap Russell 2000 lagged the other indexes, -1.36% on the day.
This kept Nasdaq’s streak of closing at fresh record highs intact, while the S&P saw its seven-day winning streak come to a close. The Dow, for its part, had spent four straight days finishing in the green. The Dow is still about 200 points off its early May record closing highs. The S&P is within 10 points of its all-time high close, while the Russell last hit its record closing high back in mid-March.
ISM Services for June seemed to be the relative bearish catalyst today, coming in 320 basis points lower on its survey headline than expected, to 60.1%. This was off May’s record-high 64.0%. This led some analysts to openly question whether we’ve already passed peak post-Covid recoveries in the Services sector. Price increases and worker shortages seem to account for the relative headwinds.
We say “relative” headwinds because, at 60%, ISM Services is still way above the breakeven level of 50%. But with the lower-than-expected surprise this morning, perhaps a drag on the economy — in the name of inflation, whether “transitory” or something more — may cause analysts to ratchet down expectations for the coming months. Then again, perhaps we’re just seeing a “smoothing out” of the data over the trailing two-month period.
One of the reasons the Nasdaq closed higher once again was the new closing high of Amazon AMZN, its first since last September. This comes on the news headline that the Pentagon had canceled a $10 billion buy in the cloud space, which had been fought over between Amazon and Microsoft MSFT. It didn’t do so much as put a hitch in Amazon’s step, however; the stock has gained 14% over the past month.
Also, founder and long-time CEO Jeff Bezos has finally stepped aside at the company’s helm, replaced as of today by Andy Jassy, who had been the head of Amazon Web Services (AWS), its massively successful cloud business which managed to tip Amazon into a massively profitable company from a frustratingly unprofitable one for years before. Bezos’ current plans including going into outer space this July 20th, on the 52nd anniversary of the Apollo 11 moon landing.
Elsewhere, oil prices pulled back today from 6-year highs, following the delayed OPEC+ meeting failing to reach an agreement on oil production policy among the largest non-U.S. oil producers, most of which are located in the Middle East. West Texas Intermediate (WTI) and Brent crude prices dipped 2% and 3% respectively today, still well above $73 per barrel. A month ago, $70 oil was still on oil companies’ wish list.
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