The push by the S&P 500 (INDEXSP:.INX) to break to a new record high last Friday carried over into today's session. The benchmark index was led by gains in financials and utilities. Citigroup's (NYSE:C) CFO commented at an investor conference in New York today that he expected the firm's trading revenue to be 20% to 25% lower in the second quarter, echoing similar comments from JPMorgan earlier this month. The higher-beta small-cap Russell 2000 (INDEXRUSSELL:RUT) and tech stocks both outperformed, while the Dow Jones Industrials (INDEXDJX:.DJI) and Transports (INDEXDJX:DJT) both underperformed.
Utility stocks gained in large part due to the results of PJM Interconnection's (the largest power grid in the US) annual auction that was released late Friday evening. The auction showed that payments to electricity producers would more than double to $120 a megawatt per day from $59.37 in the previous 12-month period as the result of rising federal energy regulation. Analyst estimates were significantly below the result.
Durable goods orders for the month of April exceeded economist estimates. Orders rose 0.8% from the prior month, better than the -0.7% estimate. In addition, the prior month's orders were revised up to +3.6% from +2.6%. A significant contributor to the topline gain was from submarine defense orders. The more closely followed figure, which excludes large transportation orders, only rose 0.1% versus no change expected. The Conference Board's May index of consumer confidence rose to 83.0 from 81.7 in the month prior, which was in line with expectations.
Tomorrow's Financial Outlook
There are no major economic report scheduled tomorrow. The Mortgage Bankers Association (MBA) will release its weekly report on mortgage applications for the week ending May 24. The Treasury is scheduled to sell four-week bills, two-year floating-rate notes, and five-year notes in various sizes.
Due out overnight is China's year-to-date industrial profits for the month of April. The biggest catalyst for risk assets will be Germany's May unemployment change.
Only two major US companies are scheduled to report earnings tomorrow: Toll Brothers (NYSE:TOL) and Palo Alto Networks (NYSE:PANW).
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