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By Connor Smith | Wednesday, June 25
-0.02. The stock market's rally this week ground to a halt today as the S&P 500 sat within striking distance of its February high.
For the day, the S&P 500 was down a near-zero amount. The decline of two hundredths of a point made for the index's smallest move since Jan. 10, 2017 when it fell just five thousandths of a point, or 0.0002%.
The Dow Jones Industrial Average fell 107 points, or 0.3%. The Nasdaq Composite rose 0.3%.
A majority of S&P 500 stocks actually fell on the day, but Nvidia, which closed at a record and finished the day as the largest company by market value, helped extend a recent rally for artificial intelligence stocks.
AI stocks have roared back from the depths of January's DeepSeek scare and the April tariff selloff. The Nasdaq 100 marked another record with a gain of 0.2%.
The latest wave of enthusiasm has followed President Donald Trump's walk-back of April 2 tariffs, followed by the recent cease-fire between Israel and Iran.
"Just a few months ago, some claimed it was near impossible for the U.S. stock market to rebound this year," writes Fundstrat strategist Hardika Singh. "America was so old news, they said. But if that were truly the case, the S&P 500 wouldn’t be flirting with all-time highs currently."
BMO Capital Markets Chief Investment Strategist Brian Belski said similarly in a recent note raising his price target back to 6700 after cutting it from that level to 6100 on April 9.
In explaining the about-face, Belski made the case that U.S. stocks are the best global equity asset because they have the most consistent fundamentals, ingenuity, and diversification. Belski notes that gains among international stocks that some traders chased are seeing their performance wane.
“For the most part, economic and earnings projections have stabilized and, in several instances, are reverting to pre-tariff levels,” Belski adds. “In fact, we believe earnings projections for sectors such as Consumer Discretionary, Technology, Communication, and ESPECIALLY Financials are understated and will help drive performance for several quarters.”
His target implies 10% upside from here. Of course, it'll have to move more than 0.0003%—and in the other direction—to get there.
DJIA: -0.25% to 42,982.43
S&P 500: -0.0003% to 6,092.16
Nasdaq: +0.31% to 19,973.55
The Hot Stock: Super Micro Computer +8.8%
The Biggest Loser: Paychex -9.4%
Best Sector: Technology +0.9%
Worst Sector: Real Estate -2.4%
Wall Street Reacts to New York Mayoral Stunner
Zohran Mamdani, a self-described Democratic socialist, defeated front-runner Andrew Cuomo in the New York Democratic mayoral primary on Tuesday. Many on Wall Street aren't happy.
The Wall Street Journal reported that the result is "rattling the financial industry." Mamdani seeks to halt rent increases on rent-stabilized apartments, offer free buses, and open government-owned grocery stores. He said the city will pay for such programs by raising the corporate tax rate to 11.5% and imposing a flat 2% tax on the wealthiest 1% of residents.
"It’s officially hot commie summer," Third Point CEO and billionaire Daniel Loeb wrote on X.
My Barron's colleague Shaina Mishkin writes that the results weighed on real estate investment trusts, or REITs, with exposure to New York City; Vornado and SL Green dropped 6.7% and 5.7%, respectively. Shaina writes:
A team of Mizuho analysts wrote on Tuesday that a Mamdani mayorship may “lead to more selective corporate spending / hiring in the city and more out- migration of individuals and families, reducing the need or growth of office leasing.”
Of course, it could be a buying opportunity.
...the recent selling opens up an opportunity for investors, the report says. “We remain bullish on NYC over West Coast Office, and see this as a buying opportunity for VNO.” The team rates Vornado Outperform, with a price target of $48. That implies a gain of more than 30% from Wednesday morning’s level.
The company’s portfolio of retail properties “remains underappreciated,” and there are “still several catalysts in the form of leasing and potential re-financing,” they wrote. “The risk/reward looks attractive, which drives our current Outperform rating overall.”
On the flip side, the prospect of a Democratic Socialist mayor hasn't impacted the city's municipal bonds, writes Barron's Andrew Bary.
New York City is one of the largest issuers in the $4 trillion muni market. It has more than $100 billion of debt outstanding, including more than $40 billion of general obligation bonds.
The city’s long-term debt was trading Wednesday at a yield of about 4.75%, unchanged from the prior session. It was in line with bond yields of other cities with similar double-A credit ratings. A recent issue of New York 5% bonds due in 2054 trade around a price of $102. Their face value is $100.
“The debt hasn’t moved a basis point,” says Dan Close, head of municipals at Nuveen, a sizable muni bond investor. A basis point is a hundredth of a percentage point. Close says that several safeguards are in place that would check the ability of Mamdani to raise taxes and spend excessively.
The Calendar
McCormick, Nike, and Walgreens Boots Alliance report quarterly results tomorrow.
The Census Bureau releases the durable goods report for May and the National Association of Realtors releases its Pending Home Sales Index for May.
The Bureau of Economic Analysis releases its third and final estimate of first-quarter gross-domestic-product growth. The previous estimate put GDP down 0.2%.
What We're Reading Today
- A Shrinking Housing Market Means Upheaval for Buyers
- Micron Reports Strong Earnings. The Stock is Up.
- BP Stock Jumps as Report Says Shell in Talks to Buy Energy Rival
- Kennedy’s New Vaccine Panel Will Weigh Overhaul of Longstanding Guidelines
- Fed Votes to Advance Capital Rule Reductions That Banks Have Been Fighting For
- QuantumScape Stock Is Soaring. Groundbreaking EV Battery Tech Is Almost Here.
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