The S&P 500 eked out its fifth straight record closing high on Wednesday as investors ended the month and the quarter by largely shrugging off positive economic data and looking toward Friday’s highly anticipated U.S. employment report. Canada’s TSX was virtually unchanged, ending the first half of 2021 with a gain of 15.7% - its best performance in more than a decade.
For the quarter, the Canadian benchmark stock index was up just shy of 8%. A rebound in value and cyclical sectors, as well as in big bank stocks, helped the TSX to outperform Wall Street this year given its heavier weightings in those equities.
On Wednesday, ahead of the Canada Day holiday in which the Toronto Stock Exchange will be closed, the S&P/TSX Composite Index fell 5.44 points, or 0.03%, at 20,165.58. Consumer staples, energy, and materials all rose about 1% - but tech stocks dropped by about the same percentage.
In the last session of 2021′s first half, the major North American indexes were languid and range-bound, with the blue-chip Dow posting gains, while the Nasdaq edged lower.
All three U.S. indexes posted their fifth consecutive quarterly gains, and the S&P 500 registered its second-best first-half performance since 1998, rising 14.4%. U.S markets are open Thursday but will be closed Monday in recognition of the Fourth of July holiday.
“It’s been a good quarter,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “As of last night’s close, the S&P has gained more than 14% year-to-date, topping the Dow and the Nasdaq. That indicates that the stock market is having a broad rally.”
For the month, the bellwether S&P 500 notched its fifth consecutive advance, while the Dow snapped its four-month winning streak. The Nasdaq also gained ground in June.
This month, investor appetite shifted away from economically sensitive cyclicals in favor of growth stocks.
“Leading sectors year-to-date are what you’d expect,” Pavlik added. “Energy, financials and industrials, and that speaks to an economic environment that’s in the early stages of a cycle.”
“(Investors) started the switch back to growth (stocks) after people started to buy in to (Fed Chair Jerome) Powell’s comments that focus on transitory inflation,” Pavlik added.
“Some of the reopening trades have gotten a bit long in the tooth and that’s leading people back to growth.”
“The overall stock market continues to be on a tear, with very consistent gains for quite some time,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Valuations, while certainly high by historical standards, have been at a fairly consistent level, benefiting from the economic recovery.”
The private sector added 692,000 jobs in June, breezing past expectations, according to payroll processor ADP. The number is 92,000 higher than the private payroll adds economists predict from the Labor Department’s more comprehensive employment report due on Friday.
Unofficially, the Dow Jones Industrial Average rose 225.34 points, or 0.66%, to 34,517.63, the S&P 500 gained 6.98 points, or 0.16%, to 4,298.78 and the Nasdaq Composite dropped 20.12 points, or 0.14%, to 14,508.22.
Oil prices rose after U.S. crude stockpiles fell for a sixth straight week and an OPEC report foresaw an undersupplied market this year.
The Brent crude contract for August, which expired on Wednesday, ended the session up 37 cents, or 0.5% at $75.13 a barrel. The September contract rose 34 cents to settle at $74.62 a barrel. U.S. West Texas Intermediate crude (WTI) settled up 49 cents, or 0.7% at $73.47 a barrel.
Both benchmarks are just below highs last reached in 2018, and recorded their seventh monthly gain in the past eight months. WTI rose more than 10% in June while Brent rose over 8%.
A Reuters poll showed that Brent was seen averaging $67.48 a barrel this year and WTI $64.54, both up from May’s poll.
U.S. crude stockpiles fell last week for the sixth straight week as refiners ramped up output in response to rising demand, the Energy Information Administration said. Inventories at Cushing, Oklahoma, the delivery point for WTI, slid to their lowest since March 2020, EIA data showed.
With files from Reuters
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