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Stocks drift higher at open, S&P 500 trades just under record

Stocks drift higher at open, S&P 500 trades just under record

09 Jun 2021

The S&P 500 traded just under its all-time high shortly after the opening bell in New York as markets continued to trade in a tight range on Wednesday.

The 500-stock index added 0.2% and came within 1 point of its intraday record within the first two minutes of the regular trading session. The Nasdaq Composite added 0.5% and the Dow Jones Industrial Average held steady around Tuesday’s closing levels.

The S&P 500 is now just 0.15% below its record high of 4,238.04 reached on May 7.

Health care, communications and technology stocks led positive stocks shortly into the session, with drugmaker Merck up 1.8%, Twitter up 1.7% and Adobe up 1.5%. Fox Corp. was the best performer in the S&P 500 with an advance of 2.3%.

Meme stock mania continued Wednesday with day traders now focusing their attention on Clover Health. The stock was up another 12% following an 85% rally on Tuesday amid explosive trading volumes.

The S&P 500 and the blue-chip Dow both closed near the flatline on Tuesday. The broad equity benchmark is now just 0.3% below its record high of 4,238.04 reached on May 7. Investors await the next reading on inflation to gauge if higher price pressures are just temporary as the economy continues to rebound from the pandemic-induced recession.

“US stocks have largely been stuck in a range since mid-April and don’t seem likely to be breaking out anytime soon,” Edward Moya, senior market analyst at Oanda, said in a note. “Investors want to see how hot pricing pressures get and how much downside in equities will occur once the Fed’s taper tantrum begins.”

The consumer price index for May is set to be released Thursday. Economists are expecting the CPI to rise 4.7% from a year earlier, according to Dow Jones. In April, the CPI increased 4.2% on an annual basis, the fastest rise since 2008.

Many on Wall Street believe the latest meme stock episode should stay contained to a handful of names, unlike the GameStop trading frenzy in January that had an impact on the broader stock market.

“Given the low risk of a broad contagion, we view the fallout of the recent short squeeze to be
limited,” Maneesh Deshpande, global head of equity derivatives strategy at Barclays, said in a note. “The current short squeeze is more localized probably because the number of stocks with high short interest has come down dramatically.”

On the data front, job openings in April soared to a new record high, with 9.3 million vacancies coming online amid the economic recovery.