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US Markets Rise on Mixed Economic Data, China Roars Back


Today's financial recap and tomorrow's financial outlook.

Markets finished up today amid mixed economic data.

The PCE Deflator, an inflation metric which the Fed watches closely, missed expectations, as did Personal Spending.

On the plus side, ISM Manufacturing,  Construction Spending, and Personal Income numbers were ahead of expectations.

Treasury yields rose as investors sold off bonds in favor of riskier assets.

The US 10-Year yield frose 5.8 bps to 2.179%.

All three major indices finished up today. The NASDAQ rallied 0.3%, the S&P 500 and Dow Jones Industrial Average each rose 0.2%.

Oil prices fell after OPEC posted that production hit a 2.5 year high in May, creating fears of oversupply despite an ongoing decline in drilling rig activity. OPEC countries are scheduled to meet this Friday, but aren't expected to change their production quota.

Transportation stocks, which have been closely watched by traders as of late, outperformed. The iShares Transportation Average ETF  (IYT) rose 1.1% as oil prices dropped.

Real Estate stocks were also strong as the iShares US Real Estate ETF (IYR) gained 1.0%.

While biotech stocks were mixed overall, there were some major individual winners in the sector. Immunogen (IMGN) rose an exceptional 72.0% after it reported to the American Society of Clinical Oncology that one of its ovarian cancer drugs showed promising results. Ignyta (RXDX) rallied 66.0% after it reported promising anti-tumor activity for its Entrectinib treatment.

The Canadian government blocked attempts from Chinese Lenovo on its bid to acquire Blackberry (BBRY) on security concern, according to news reports. It is expected that any bidder based outside of North America will be subject to scrutiny by the Canadian government. Blackberry shares finished down 3.0% today.

As was heavily rumored last week, Intel (INTC) announced it will acquire Altera (ALTR) for $54 per share. The bid works out to a 10.5% premium to Altera's Friday closing price. Altera previously rejected the same offer by Intel back in April. Intel shares fell 1.6% while Altera gained 5.8%.

European markets were mostly up today. France's CAC rallied 0.35%, and Germany's DAX rose 0.19%. Yields also spiked today with the 10-year German bund gaining 5.4 bps and the Spanish 10-year yield increasing 12.5 bps.

Greece was back in the news once again after Prime Minister Alexis Tsipras claimed that "we're seeing the complete abolition of democracy in Europe" as Greece still can't reach a deal with its creditors. The country's next IMF loan payment is due on June 5.

Chinese markets performed exceedingly well today following two trading days of losses. The Shanghai Composite gained 4.9% despite disappointing economic numbers.

Elsewhere in Asia, the Hong Kong Hang Seng Index rose 0.6% while Japan's Nikkei finished up 0.03%.

Tuesday's Financial Outlook

US economic news for tomorrow will include ISM New York, Factory Orders, IBD/TIPP Economic Optimism, and Wards Auto Sales data.

Overseas, we have Australia's Rate Decision and GDP, German Employment Report, Britain's Net Consumer Debt, Euro-Zone Consumer Price Index, and HSBC China Composite and Services PMI's.

Earnings announcements before the open will include Medtronic (MDT), Cracker Barrel (CBRL), and Dollar General (DG). After the close, we'll see results from ABM Industries (ABMI), Ambarella (AMBA), Ascena Retail Group (ASNA), and Guess? (GES).
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