S&P 500 Hovers Near 5,500 Mark as US Yields Climb: Markets Wrap

The S&P 500 briefly topped the historic 5,500 mark, remaining above a technical threshold that typically hints at an overbought market. Big tech saw a mixed performance, with Apple Inc. down and Nvidia Corp. heading toward a fresh peak. After coming close to erasing this year’s losses, Treasuries retreated.

“Bullish momentum remains intact for the S&P 500 and Nasdaq, but near-term overbought conditions coupled with deteriorating breadth make equities vulnerable to a pullback or correction,” said Craig Johnson at Piper Sandler.

Economic data mostly pointed to weakness, with new home construction slumping to the slowest pace in four years and the Philadelphia Fed Index trailing estimates. US initial jobless claims were little changed at 238,000 last week.

The S&P 500 edged up slightly, led by gains in energy shares. Dell Technologies Inc. rose after Chief Executive Officer Michael Dell said the company is building a “Dell AI factory” for Elon Musk’s startup xAI alongside Nvidia. Banks fell.

Treasury 10-year yields advanced six basis points to 4.28%. The dollar rose. Traders are betting the Bank of England will cut interest rates in August after policymakers signaled they are willing to start easing monetary policy.

While the S&P 500 is marching from one record to the next, fewer and fewer stocks are participating in this year’s rally.

Nearly a third of its constituents have hit a one-month low in the past month, data compiled by Bloomberg through the end of last week show. That far outnumbers those that are pushing it higher. In fact, just 3.2% hit a one-month high, including Apple Inc. and high-flying Nvidia Corp., which just passed Microsoft Corp. to become the world’s most-valuable company.

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“With AI demand remaining robust and the technology likely to disrupt and transform industries in the years to come, we think it is important for investors to ensure they’re sufficiently invested,” said Solita Marcelli at UBS Global Wealth Management.

Meantime, a bevy of measures show how market breadth remains weak, boosting uncertainty about the rally’s staying power. Take the NYSE advance-decline line, a popular indicator that tracks the number of securities rising minus the number falling on the exchange each day. It closed at a fresh six-week low on Friday.

Corporate Highlights:

Kroger Co.’s sales inched up last quarter, and that was enough to win over investors who’ve been wading through mixed results among US retailers.
Hertz Global Holdings Inc. is looking to raise $750 million in a two-part junk bond offering as it works to bolster its balance sheet after a misstep on its electric vehicle fleet.
Honeywell International Inc. agreed to buy aerospace and defense company CAES Systems from private equity firm Advent International for $1.9 billion.
Accenture Plc reported better-than-expected new bookings for the third quarter, including a surge in its generative artificial-intelligence offering to more than $900 million.
BP Plc expanded its biofuel operations in Brazil by agreeing to take full control of a joint venture with Bunge Global SA.
On June 25, McDonald’s Corp. will kick off a marketing blitz and a new $5 meal deal, raising the stakes of what’s shaping up to be an all-out battle among US restaurants desperate to lure back inflation-battered diners.
Giant drugmakers will lose billions in sales over the next few years as patents on some of their most lucrative medicines expire. It’s the perfect time to snap up stocks at a discount, according to TD Cowen.
Gilead Sciences Inc.’s experimental twice-yearly shot prevented 100% of HIV cases in women and adolescent girls in Africa, the first successful big trial of what’s hoped to become a powerful new drug regimen for fending off the virus.

Key events this week: