Stock Market News For June 27, 2017

Gain in utilities and telecom stocks led the Dow and the S&P 500 to finish in the green on Monday. Moreover, financials were boosted by bank shares following news that the Italian government decided to close two of its struggling regional banks, Popolare di Vicenza and Veneto Banca. Additionally investors kept a close watch on comments made by several Fed officials.

Meanwhile, continued overvaluation concerns weighed on major tech stocks, which in turn led the tech-based Nasdaq finish in negative territory. Additionally, investors digested weaker than anticipated durable-goods orders data.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) advanced 0.1% to close at 21,409.55. The S&P 500 increased 0.77 points to close at 2,439.07. The tech-heavy Nasdaq Composite Index declined 0.3% to finish at 6,247.15. The Dow, the S&P 500 and Nasdaq have advanced 8.3%, 8.9% and 16.1% respectively on a year to date basis. A total of around 6.4 billion shares were traded on Monday, lower than the last 20-session average of 7.2 billion shares. The fear-gauge CBOE Volatility Index (VIX) traded lower than 10 for the first time since June 9. Advancers outnumbered declining stocks on the NYSE by a 1.88 to 1 ratio.

Defensive Sectors Gain

Durable-goods orders in May recorded a decline for the second successive month. Durable-goods orders fell 1.1% against the consensus estimate of a fall of 0.5%. This decrease followed a 0.9% decline in April. Weaker than feared durable orders data raised concerns over pace of economic growth which in turn led investors to invest in treasury bonds and defensive sectors.

Defensive sectors experienced strong gains as rightly pointed out by portfolio manager of Kingsview Asset Management in Chicago, Paul Nolte. Nolte said "The bond market is signaling an economic slowing. That's why you're seeing defensive names like utilities do well, because equity investors are buying more in line with what that bond market is saying."

Gains in defensive stocks like utilities and telecommunications had a positive impact on the broader markets. The broader Utilities Select Sector SPDR (XLU) increased 0.7%, emerging as the best performing sector of S&P 500. Some of its key holdings, including Exelon Corp (NYSE:EXC) and NextEra Energy (NYSE:NEE) increased 2% and 0.8% respectively.

Separately, S&P 500 Telecom Service (Sector) advanced 0.6%, boosted by rise in shares of AT&T Inc (NYSE:T) and Verizon Communications (NYSE:VZ) . AT&T and Verizon experienced a gain of 0.5% and 0.8% respectively.

Financials Boost Broader Markets

Bank shares gained following news that the Italian government entered into a deal to shut down two of its regional banks, Popolare di Vicenza and Veneto Banca. This in turn led the U.S. bank shares northward.

Additionally, financials were also boosted by comments from several Fed officials, who seemed to support further rate hike this year. San Francisco Fed President John Williams reportedly said another rate hike is required this year followed by three to four hikes in 2018. Separately, New York Fed chief William Dudley said that the reduction of credit spreads and declining bond yields might support central bank to continue its tightening policy.

The broader Financials Select Sector SPDR (XLF) advanced 0.5%. Some of its key holdings, including US Bancorp (NYSE:USB) and Goldman Sachs Group (NYSE:S) rose 0.5% and 1.5% respectively.

Technology Shares Drag Down Nasdaq

Technology shares fell on Monday, as investors remained concerned about overvaluation of technology companies. Drop in shares of large-cap tech companies, including Microsoft (NYSE:T) , Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) led to the day’s losses. The tech sell-off was sparked off by release of a report from Goldman Sachs that issued warnings on valuations of major tech stalwarts.

Shares of Alphabet, Microsoft and Apple (NASDAQ:AAPL) declined 1.4%, 1% and 0.3% respectively. The broader Technology Select Sector SPDR (XLK) declined 0.5%, emerging as the worst performing sector of S&P 500.

Stocks that made Headlines

Martin Marietta to Buy Bluegrass, Boost Aggregates Business

In line with its strategy to strengthen the aggregates business, Martin Marietta Materials, Inc. (NYSE:MLM) entered into an agreement to acquire Bluegrass Materials Company for $1.625 billion in cash. (Read More)

Is Sprint Mulling Over Wireless Talks with Comcast-Charter?

Per the latest The Wall Street Journal report, U.S. national wireless carrier Sprint Corp. (NYSE:S) might be eyeing a merger or network-resale agreement with two major U.S. cable multi-service operators (MSOs), Comcast Corp. (NYSE:S) and Charter Communications Inc. (NYSE:T) . (Read More)

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