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Stocks Rally On Positive Economic Data, Euro Bonds Suffer Under Draghi


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

Markets rallied today on a decent batch of economic data.

The ADP Employment Change for May showed that the economy added 201,000 jobs, edging out the 200,000 figure expected by economists.

The  April Trade Balance was -$40.9 billion, coming in well below the -$44.0 billion consensus.

The Markit US Composite PMI for May was 56.0, a decline from last month, while the Services PMI missed at 56.2 vs. the expected 56.4.

And the May ISM Non-Manufacturing Composite for May missed at 55.7.

Oil prices fell 3% despite a fifth straight weekly decline in US crude stockpiles.

The major indices all finished up, led by the NASDAQ, which rose 0.5%. The S&P 500 closed up 0.2%, while the DJIA gained 0.4%.

The Russell 2000 outperformed all major indices with a 1% rally.

Bond yields spiked today on the positive economic data. The 10-Year Treasury yield jumped to 2.38%, its highest level since November.

The cybersecurity sector performed well today. The Purefunds ISE Cyber Security ETF (HACK) rallied 1.5%. The regional banking sector also rallied hard on the increase in rates.

Transports rallied on the drop in oil prices.

The highly watched biotech sector finished strong as well. The S&P Biotech ETF (XBI) rose 1.1% and the NASDAQ Biotechnology ETF (IBB) gained 0.4%. Heron Therapeutics (HRTX) closed up 14.8%, while Ignyta (RXDX) rallied 11.6%

European markets rose as the European Central Bank raised its forecast for inflation this year to 0.3% from 0%. ECB President Mario Draghi also emphasized the success of the ECB's QE program, and said it will run its full course.

The euro was up sharply against the US dollar, while France's CAC was up 0.59% with Germany's DAX rallying 0.80%.

European bond yields spiked as well. Germany's 10-year bund yield gained 16.8 bps, while French 10-year swung up 14.7 bps.

Greece remained a question mark, as the country received a proposal from creditors, but there is still no resolution.

Asian markets were mixed. Japan's Nikkei closed down 0.34%, while South Korea's Kospi lost 0.74%.

The Hong Kong Hang Seng inched up 0.69%, and the Shanhai Composite lost 0.01%

Thursday's Financial Outlook

Tomorrow's US economic news will feature Challenger Job Cuts, Nonfarm Productivity, Unit Labor Costs, Jobless Claims, and the EIA Natural Gas Storage Change.

Overseas news will include the Bank of England's Rate Decision and Asset Purchase Target announcement, and Canada's Ivey PMI.

Tomorrow's pre-market earnings announcements include JM Smucker (SJM), Michaels Stores (MIK), and Navistar (NAV). After the close, we will see results from Thor Industries (THOR), and UTI Worldwide (UTIW).
No positions in stocks mentioned.
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