On Wednesday, the S&P 500 and Nasdaq Composite closed lower, while the Dow Jones Industrial Average added 91.74 points, closing at 33,665.02. The S&P 500 closed at 4,267.52, down 0.38%, while the Nasdaq Composite declined 1.29% to end at 13,104.89. The best-performing S&P 500 sector was energy, which rose by about 2.6%, with the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and First Trust Natural Gas ETF (FCG) adding more than 3% each.
Regional Banks
Regional banks saw their share gains continue, with the SPDR S&P Regional Banking ETF (KRE) rising more than 3%. Shares of PacWest Bancorp jumped 14.4%, while Zions Bancorporation added 4.5%. The boost in regional banks’ share gains can be attributed to the promise of AI, which has lifted tech names in recent months.
Cautious Outlook
Crossmark Global Investments’ Chief Investment Officer Bob Doll has warned that despite the recent market rally, more impact from the Federal Reserve’s interest rate hikes will likely be felt in the future. Doll stated that leading economic indicators are down 13-months in a row, and there are still liquidity issues. He cautioned investors to not be too optimistic and not long-route rallies.
Trade Deficit
The US trade deficit has continued to increase in April but came in slightly below economists’ expectations. However, the deficit could translate into lower GDP growth for the second quarter.
In summary, the US market is fluctuating near its highest closing levels since August 2022. While energy and regional banks have seen an increase in shares, Doll’s cautionary warning has reminded investors to not be too optimistic and that more impact from the Federal Reserve’s interest rate hikes is yet to come. The US trade deficit also poses a potential challenge to GDP growth in the second quarter.
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