Dow Snaps Losing Streak on Strong Economic Data

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published 27 June 2023

A slow start for stocks Tuesday turned into a sprint for the fine finish, with all three indexes posting solid gains amid an onslaught of better-than-expected economic reports. Still, not all of the day's price action was positive, with one electric vehicle (EV) stock plunging on bankruptcy news.

Ahead of the opening bell, the Census Bureau said orders for durable goods were up 1.7% from April to May, their third straight monthly rise. Excluding transportation and defense, new orders were 0.6% and 3.0% higher, respectively.

The Census Bureau also said new home sales jumped 12.2% on a monthly basis in May and 20.0% on an annual basis. Separate data from both the Federal Housing Finance Agency and S&P Dow Jones Indices showed home prices rose in April.

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Rounding out the economic calendar was a report from The Conference Board that showed consumer confidence jumped 7% in June vs the month of May. At 109.7, the confidence index posted its highest reading since January 2022.

"Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000," said Dana Peterson, chief economist at The Conference Board, in today's press release. "Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next six to 12 months."

Taken as a whole, today's slew of data supports the view that the U.S. economy "is not breaking just yet," says Edward Moya, senior market strategist at currency data provider OANDA.

Rate-hike expectations for the next Fed meeting ticked slightly higher after today's data, with futures traders now pricing in a 76.9% probability of a quarter-point increase vs Monday's reading of 74.4%, according to CME Group.

Lordstown Motors files for bankruptcy

Meanwhile, Lordstown Motors (RIDE) stock plunged 17.2% after the electric vehicle maker filed for Chapter 11 bankruptcy. The company, whose electric Endurance pickup was once praised by former President Donald Trump, has seen its share price steadily decline since peaking near $450 in September 2020. Today, RIDE closed in penny-stock territory, at $2.29.

As for the major indexes, the Nasdaq Composite closed up 1.7% at 13,555 and the S&P 500 was 1.2% higher at 4,378. The Dow Jones Industrial Average gained 0.6% to 33,926, snapping its six-day losing streak even as component Walgreens Boots Alliance (WBA) tumbled 9.3% following a fiscal Q3 earnings miss and downwardly revised full-year guidance.

Travel stocks shine

Drilling down into today's sector performances, consumer discretionary stocks (+2.2%) led the way thanks to big gains for a pair of travel names. Cruise operator Carnival (CCL), for one, surged 8.8% after reporting better-than-expected fiscal second-quarter revenue. Delta Air Lines (DAL) jumped 6.8% after boosting its full-year profit and cash flow guidance.

Coming in a close second were tech stocks (+2.0%), while communication services stocks landed at a distant third (+1.7%). Only one of the market's 11 sectors – healthcare (-0.2%) – closed in the red, hurt by weakness in shares of diagnostics firm Thermo Fisher Scientific (TMO, -2.4%), as well as the aforementioned drop in WBA stock.

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With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.