Stocks appeared in line for a slight weekly advance until Friday afternoon, when a sharp decline in a number of mega-cap tech stocks – led by Apple (AAPL), Alphabet (GOOG), Facebook (FB), Microsoft (MSFT), and Amazon (AMZN) – pushed the Nasdaq down nearly 2.5% at its low point. The precipitous drop in tech left the Nasdaq with a weekly loss, while the Dow managed a small gain and the S&P was fractionally lower on a weekly basis. Attention next week will turn to central banks, as several of them will be meeting, headlined by the U.S. Federal Reserve, which is widely expected to raise interest rates.
MACRO NEWS: In the U.S., Markit’s services PMI was 53.6 in the final print for May, down from the 54.0 preliminary reading, but a little better than April’s 53.1 figure. The ISM services index dipped 0.7 points to 56.9 in May. Factory orders slipped 0.2% in April, as expected. Nonfarm productivity growth in the first quarter was revised higher to unchanged from the initially reported decline of 0.6%. The Job Openings and Labor Turnover Survey, or JOLTS, report showed that the number of job openings climbed 259,000 to 6.044M in April, which topped the estimated 5.75M.
In Europe, the U.K. election didn’t go as Prime Minister Theresa May hoped, as her Tory party lost parliament seats, resulting in a “hung parliament.” After the election, May said she will not step down and plans to put together a government with the support of the Democratic Unionists. The European Central Bank decided that the interest rate on its main refinancing operations and other key interest rates will remain unchanged, as expected. The ECB also confirmed that its net asset purchases, at the current monthly pace of EUR 60B, are intended to run until the end of December 2017, or beyond, if necessary. Additionally, the ECB trimmed its medium-term inflation forecasts. The Eurozone services PMI was largely inline for May, coming in at 56.3 versus the 56.2 flash reading.
