A Hot Streak Ends

By Alex Eule | Tuesday, July 6

Different Worries. In bull markets, investor worries often get overlooked, but it's worth keeping tabs on the fears, especially when they start to shift.

Not that long ago, investors were fretting over runaway inflation, but since the 10-year Treasury yield peaked at 1.75% in late March, it has fallen 38 basis points, or nearly four-tenths of a percentage point, including a seven basis-point decline today. For the Treasury market, these are notable moves, and they suggest that the narrative has shifted from inflation fears to worries about growth. 

With the economy reopened -- the July 4th weekend felt as back to normal as I've seen in 16 months -- has growth already peaked?

Peak growth believers found support today in a new survey of the services sector from the Institute of Supply Management. The ISM's services index came in at 60.1%, indicating continued growth, but down 3.9 percentage points from May and below economists' forecast of 63%. 

"The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month's all-time high," ISM's Anthony Nieves said. "Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions."

There was other news that could crimp growth in the months to come, including new data about the Covid-19 Delta variant and China's continued crackdown on tech companies. 

Altogether, the news was enough to break the S&P 500's seven-day streak of consecutive record closes. The S&P fell 0.2%, though the day felt worse for much of the market: Just 153 S&P components were in positive territory, versus 347 decliners. 

The Dow Jones Industrial Average was down 209 points, or 0.6%.

The Nasdaq Composite, which is full of tech stocks that tend to move inversely to reopening progress, is still doing fine. It rose 0.2% on the day to a new high. 

DJIA: -0.60% to 34,577.37
S&P 500: -0.20% to 4,343.54
Nasdaq: +0.17% to 14,663.64

The Hot Stock: Amazon.com +4.7%
The Biggest Loser: Diamondback Energy -7.0%

Best Sector: Real Estate +0.9%
Worst Sector: Energy -3.3%