Stocks made modest moves in Monday's abbreviated session as most market participants got a head start on their Fourth of July festivities. (As a reminder, the stock and bond markets closed today at 1 pm Eastern time and are closed Tuesday, July 4, for the Independence Day holiday.)
Still, there was plenty to take in for those who did stick around, including a fresh batch of manufacturing data and a red-hot rally for Tesla (TSLA).
Shortly after the opening bell, data from S&P Global showed manufacturing activity in the U.S. retreated further into contraction territory in June, with its U.S. manufacturing purchasing managers index (PMI) falling to 46.3 from May's reading of 48.4. Readings below 50 indicate contraction, while those above 50 signal expansion. The decline came amid "a marked contraction in new orders," the report indicated, as inflationary pressures and higher interest rates suppressed demand.
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"The health of the U.S. manufacturing sector took a sharp turn for the worse in June, adding to concerns over the economy potentially slipping into recession in the second half of the year," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Echoing this, the Institute for Supply Management said its manufacturing PMI fell to 46% in June from May's 46.9% reading. "The June composite index reading reflects companies continuing to manage outputs down as softness continues and optimism about the second half of 2023 weakens," the report noted.
Tesla stock pops on strong June deliveries
Meanwhile, in single-stock news, Tesla shares surged 6.9% after the electric vehicle (EV) maker over the weekend said deliveries surged 83% year-over-year in the second quarter to 466,140 vehicles. The massive jump was sparked by the company's price cuts from earlier this year as competition in the EV space ramps up. Tesla will unveil its full Q2 results after the market closes on Wednesday, July 19.
As for the major indexes, the Nasdaq Composite rose 0.2% at 13,816, the S&P 500 gained 0.1% to 4,455, and the Dow Jones Industrial Average finished marginally higher at 34,418.
Areas of opportunity for investors
Stocks closed out the first half of the year in fine fashion, and while the second half is getting off the ground slowly, there are plenty of reasons "to be constructive" moving forward, says Carol Schleif, chief investment officer at BMO Family Office. For one, we're finally starting to see more market breadth vs just mega-cap tech stocks driving stocks higher (though the latter isn't necessarily a bad thing). Specifically, financials, healthcare, consumer cyclicals and industrials all displayed solid performance in June.
Going forward, Schleif says it's important for investors to focus on long-term themes and trends in markets, including in areas of opportunity like artificial intelligence (AI), electric vehicles and medical technology. "These are areas of the market that are not dependent on what the Federal Reserve does or whether or not we will see a recession," Schleif adds.
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