U.S. equities continued to oscillate aimlessly near the unchanged line on Tuesday in one of the quietest periods on Wall Street in decades. No major catalysts were in play. The S&P 500 and other major indices shoved the gearshift in to neutral.
In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 lost 0.1%, the Nasdaq Composite gained 0.3%, and the Russell 2000 gained a fraction. Treasury bonds were unchanged, the dollar was stronger, gold lost 0.9% to continue a recent selloff, and oil was lower ahead of inventory data down 1.2%.
Breadth was negative, with 1.3 decliners for every advancer on the New York Stock Exchange. Volume was in-line with recent trends. Consumer discretionary stocks led the way with a 0.5% gain while utilities lost 0.9%.
A few single-stock highlights:
- Valeant Pharmaceuticals Intl Intc (NYSE:VRX) gained 24.4% on mixed results (revenues missed but earnings beat) thanks to a raise of earnings guidance.
- Online furnishings retailer Wayfair Inc (NYSE:W) gained 20.7% on a top- and bottom-line beat on a 7% increase in active customers and strong revenue guidance.
- United Continental Holdings Inc (NYSE:UAL) gained 4.8% to lead strength in the major airlines on a 7.4% increase in April traffic.
- On the downside, Hertz Global Holdings, Inc (NYSE:HTZ) fell 14.2% on an earnings and revenue miss amid ongoing pressure from Uber and other car hailing services.
- Plug Power Inc (NASDAQ:PLUG) fell 7.5% on a wider-than-expected loss.
- Pandora Media Inc (NYSE:P) fell 4.4% on a revenue miss and guidance cut.
On the economic front, the NFIB’s small business optimism index ticked down slightly in April but posted its sixth consecutive month of historically high sentiment — a run not seen since 1983 during President Reagan’s first term.
Separately, the Job Openings and Labor Turnover Survey showed job postings increased slightly to 5.7 million (highest level since July 2016). Hire and quits rate was unchanged.
Turning back to the complacency, the CBOE Volatility Index (VIX) — Wall Street’s “fear gauge” — just set a record of 12 days under the 11 level. In other words, never before have investors felt this comfortable.
Yet it comes at a time when valuations as measured by the S&P 500 Shiller P/E ratio have only been higher heading into the 1929 and 2000 market bubbles; when Q2 GDP growth expectations are already being marked down after a pitiful 0.7% Q1 performance; and earnings expectations are rolling over.
Meanwhile, the labor market is tightening, energy and commodity prices are moving lower and all that post-election optimism is failing to translate into actual spending as evidenced by weak retail sales.