1:13pm: Tesla shares soar on delivery numbers
The Dow closed the shortened Monday session up 11 points at 34,418, the Nasdaq Composite increased 29 points, 0.2%, to 13,817 and the S&P 500 added 5 points, 0.1%, to 4,456. The small-cap Russell 2000 index improved 6 points, 0.3%, to 1,894.
The indexes ended the first session of a new trading month on the right foot, albeit after an up-and-down morning. That builds on a strong first half of 2023, particularly for the Nasdaq, which saw its best start to the year in 40 years.
“Investors are saying, ‘you know what, maybe now is the time to alter my mindset from ‘Oh no’ to ’FOMO,″” said Sam Stovall, chief investment strategist at CFRA Research, referring to the fear of missing out. “Instead of being overly worried, maybe investors might want to make sure that they don’t miss out on a potentially positive second half now that the first half has offered us a running start.”
One of the biggest risers was Tesla, shares of which jumped nearly 7% to $279.82 after the company announced delivery and production numbers that topped Street expectations.
9:40am: Benchmarks begin shortened trading day mixed
Shortly after the opening bell, the Dow was down 0.3%, to 34,305.25 while Nasdaq Composite was up 0.2% to 13,812.94 and the S&P 500 declined 0.1%, to 4,446.13.
Trading has been quiet so far ahead of Independence Day. Notably, though, electric vehicle stocks are having a good start to the second half of the year with Tesla currently up 6.3% to $278.26. Tesla's record car deliveries worldwide are having an effect.
Confounding a batch of recent strong US data, two sets of manufacturing purchasing managers indexes (PMI) proved weak on Monday.
The Institute for Supply Management (ISM) manufacturing PMI fell to a reading of 46.0% in June of 2023, its lowest since May of 2020, down from 46.9% in May and below forecasts of an increase to 47.0%. June was the eighth consecutive month of contraction following a 28-month period of growth.
The Inventories Index dropped 1.8 percentage points to 44.0%, down from the May reading of 45.8%. The New Export Orders Index reading of 47.3% was 2.7 percentage points lower than May’s figure of 50.%. The Imports Index remained in contraction territory at 49.3%, but it was higher than the 47.3% reported in May.
In a statement, Timothy R Fiore, chair of the ISM’s Manufacturing Business Survey Committee commented: “The US manufacturing sector shrank again, with the Manufacturing PMI losing ground compared to the previous month, indicating a faster rate of contraction. The June composite index reading reflects companies continuing to manage outputs down as softness continues and optimism about the second half of 2023 weakens.”
Meanwhile, the S&P Global US manufacturing PMI fell to a reading of 46.3 in June, down from 48.4 in May, signalling the steepest decline in operating conditions so far in 2023, as the recent downturn intensified. S&P Global noted that manufacturing performance has deteriorated in seven of the last eight months.
In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, commented: “Leading the darkening picture was a severe drop in demand for goods, with new orders slumping at a rate among the steepest since the global financial crisis of 2009. Companies report that customers have become increasingly reticent to spend amid the rising cost of living, higher interest rates, growing concerns about the economic outlook and a switch in spending to service.”
“Exacerbating the downturn has been a continued focus on inventory reduction as manufacturers, their suppliers and their customers all seek to cut warehouse stocks in the face of weakening demand,” Williamson added.
The big piece of economic data comes on Friday when the jobs report comes out.
7:45am: Stocks to start in mixed fashion
US stocks are expected to start the first session of the second half of 2023 in mixed fashion after strong gains on the final session of the first half on Friday, with investors more focused on Tuesday's Independence Day holiday.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.1% lower, while those for the S&P 500 were flat, but contracts for the Nasdaq-100 added 0.1%. The markets will close at 1.00pm ET on Monday ahead of Independence Day.
On Friday, the DJIA ended 285 points, or 0.8% higher at 34,407, while the S&P 500 index jumped 1.3%, and the Nasdaq Composite added 1.5%.
The Nasdaq Composite closed out its biggest first-half gain since 1983, surging 31.7%, while the S&P 500 jumped 15.9% for its best first-half since 2019. The DJIA lagged, climbing a modest 3.8% during the period.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "Equities did well. Even though profits fell, they fell less than expected and more importantly, AI saved the day sending the Big Tech stocks to a nice bull market. Bonds on the other hand tumbled as US spending and growth remained resilient. The latter convinced the Federal Reserve (FeD) that it should keep hiking the interest rates."
"But," she added, "last week’s strong economic data released in the US, combined with Friday’s softer-than-expected PCE figures supported, yet again, the idea of a soft landing and further fueled the rally in stocks."
"Of course, this incredible performance makes many investors wonder whether the equity rally could continue in the second half," Ozkardeskaya concluded.
Investors will have the latest US ISM Manufacturing PMI and S&P Global manufacturing PMI data for June to assess on Monday morning, ahead of Friday’s always crucial June jobs report.
On the corporate front, Tesla shares were little changed in overnight trading after the electric vehicle maker reported delivery and production numbers that beat analysts’ expectations.
Elsewhere, United Airlines shares inched marginally lower as bad weather contributed to a swath of flight disruptions over the long holiday weekend.