Market Perspective for June 2, 2017

The Dow Jones Industrial Average joined the S&P 500 and Nasdaq at all-time highs. The Russell 2000 led the week’s performance, however, with a 1.67-percent gain. The Nasdaq climbed 1.54 percent, the S&P 500 0.96 percent, and the Dow 0.59 percent. Shares of Amazon (AMZN) closed above $1000 for the first time.

Healthcare led the S&P 500 with a 2-percent advance, followed by consumer discretionary shares at 1.7 percent, and technology and consumer staples both climbing 1.4 percent. Of the healthcare related subsectors, Biotech rose 2.6 percent, edging out the 2.3-percent advance in medical devices.

Energy fell with crude oil prices, which finished the week at $47.80 from $49.80 last Friday. Energy and energy production shares closed at new 2017 lows. Energy services fell to a new 52-week low.

The financial sector slipped mid-week after J.P. Morgan (JPM) and Bank of America (BAC) reported lower-than-expected second-quarter trading revenue, citing low volatility in financial markets. The 10-year Treasury yield fell to 2.16 percent on Friday.

The Conference Board’s measure of consumer confidence fell to 117.9 in May. Confidence remains near two-decade highs, but it is off the peak set in February. The May Chicago PMI, Markit and ISM manufacturing PMIs all showed an improvement in the manufacturing sector. The ADP Employment report was far stronger than expected, with private payrolls estimated to have risen 253,000 last month.

Auto sales were flat. Although the major automakers beat estimates, the sales pace eased to 16.6 million vehicles. Unemployment fell to 4.3 percent in May, but job creation stalled with only 138,000 new jobs, below the consensus forecast of 185,000. Odds of a June rate hike finished the week at 96 percent, nonetheless.

Dollar General (DG) beat on sales and earnings and raised guidance. Shares jumped on the news. Another discount retailer, Five Below (FIVE), also delivered strong earnings.

Palo Alto Networks (PANW) beat estimates by more than 10 percent, and delivered earnings growth of 45 percent. Shares gained 17 percent following the news. Shares of Workday (WDAY) rallied nearly 3 percent after the firm nearly doubled earnings estimates. Analog Devices (ADI) also advanced on stronger-than-expected earnings, sales, and guidance, and shares of Broadcom (AVGO) popped 8.6 percent to a new all-time high on Friday.

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