Market Snapshot: Dow, S&P 500 struggle for momentum, as Nasdaq Composite aims for 16th record close

What are major benchmarks doing?

• The Dow Jones Industrial Average
  DJIA,
  -0.07%
  was 20 points, or less than 0.1%, at 33,924.

• The S&P 500
  SPX,
  +0.04%
  climbed by about 4 points to around 4,250, not far from last week’s record closing high at 4,255.15 and its all-time intraday peak at 4,257.16.

• The Nasdaq Composite Index
  COMP,
  +0.14%
  was up 33 points, or 0.2%, at 14,286, establishing a record intraday peak at 14,317.66 in Wednesday action.

On Tuesday, stocks pushed higher, with the Nasdaq Composite closing at a record, while the Dow added 68.61 points, or 0.2%, and the S&P 500 rose 0.5%, leaving it 0.2% away from its all-time high finish of 4255.15 on June 14.

What’s driving the market?

The Dow was struggling but the broader market was seeing some traction higher on Wednesday after Federal Reserve Chairman Jerome Powell testified Monday before a House committee, reassuring investors that the central bank expects rising inflationary pressures to prove transitory. Powell’s tone was echoed by other Fed officials speaking Tuesday.

“US stocks are stabilizing as investors are clearly in wait-and-see mode over the current wave of inflationary pressures,” wrote Edward Moya, senior market analyst at Oanda, in a Wednesday research note.

Powell’s more dovish comments on Monday followed last week’s update by the interest rate-setting Federal Open Market Committee, where policy makers said that they expect to begin raising interest rates more quickly than investors had anticipated and had started to discuss when it would be appropriate to consider scaling back monthly bond purchases.

“Investors deciphered all this as implying the Fed won’t slam on the brakes too hard and will hold the market’s hand throughout the normalization process, which helped propel the rate-sensitive Nasdaq to new record highs as tech and growth stocks came back in vogue,” said Marios Hadjikyriacos, investment analyst at XM, in a note.

Technology and growth-oriented stocks benefited from mostly muted moves in yields for government debt, which were holding lower after Powell’s comments.

On the economic front on Wednesday, a reading of the U.S. current-account deficit climbed 11.7% to $195.7 billion in the first three months of 2021.

Meanwhile, IHS Markit U.S. flash manufacturing purchasing managers index rose to 62.6 in June from 62.1 in May, while the U.S. flash services PMI fell to 64.8 in June from 70.4 in the prior month. The flash U.S. Composite PMI Output Index posted 63.9 in June, down from 68.7 in May, but nonetheless signaled a historically elevated rate of expansion in output across the private sector.

Moderations in activity growth were seen in both the manufacturing
and service sectors, with goods producers hampered in particular by significant supplier delays and both sectors reporting difficulties finding staff, Chris Williamson, chief business economist at IHS Markit, said.

Earlier Wednesday IHS Markit reported its flash eurozone composite PMI increased from 57.1 in May to 59.2 in June, its highest since June 2006, indicating a third successive month of accelerating output growth as the economy continued to open up from COVID-19 related restrictions.

Meanwhile, U.S. new home sales fell 5.9% to a seasonally adjusted annual rate of 769,000 units last month, the lowest level since May 2020, the Commerce Department said on Wednesday.

Investors will also hear from Boston Fed President Eric Rosengren, who is delivering remarks at an event at 4:30 p.m.

Which companies are in focus?

• Southwest Airlines Co. LUV said Wednesday that Robert Jordan will succeed Gary Kelly as chief executive, effective Feb. 1, 2022. Its shares were off 0.9%.

• Embark Trucks Inc., a maker of self-driving technology for the trucking industry, said Wednesday it is going public via a merger with special-purpose acquisition corporation Norther Genesis Acquisition Corp. II NGAB, in a deal with a pro forma implied enterprise value of about $4.55 billion.

• Amazon.com Inc.
  AMZN,
  -0.25%
  said it planned Wednesday to announce commitments to buy 1.5 gigawatts of production capacity from 14 new solar and wind plants around the world as part of its push to purchase enough renewable energy to cover all of the company’s activities by 2025. Its stock was down 0.4%.

• Sonoco Products Co.
  SON,
  -0.20%
  said Wednesday that it would will raise the price of all paperboard tubes and cores by at least 6%, effective with shipments in the U.S. and Canada on or after July 26. Shares were off 0.1%.

• EverCommerce Inc.
  EVCM,
  
  set terms of its initial public offering, as the Colorado-based provider of software-as-a-service for small- and medium-size service-based businesses aims to raise up to $344.1 million and be valued at up to $3.46 billion. The company is offering 19.12 million shares in the IPO, which is expected to price between $16 and $18 a share. The stock is expected to list on the Nasdaq under the ticker symbol “EVCM.” 

• Sprinklr Inc.’s CXM, downsized initial public offering priced below the expected range, lowering what the customer-experience software company raised to $266 million from a previous expectation of up to $380 million. 

How are other assets faring?

• The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, turned higher Wednesday to around 1.49% from 1.471% on Tuesday. Yields and debt prices move inversely to each other.

• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down by about 0.1%.

• U.S. oil futures were rising, with West Texas Intermediate crude for August delivery CL00 up 1.3% at $73.77 a barrel, up after the Energy Information Administration weekly data showed that crude-oil inventories were down 7.6 million barrels last week.

• Gold futures GC00 rose 0.9% at $1,793.50 an ounce.

• In European equity trading, the pan-continental Stoxx Europe 600 SXXP closed down 0.7% and London’s FTSE 100 UKX lost 0.2%.

• In Asia, the Shanghai Composite SHCOMP finished 0.3% higher, the Hang Seng Index HSI rallied by 1.8% in Hong Kong, and Japan’s Nikkei 225 NIK fell less than 0.1% lower.