Morgans AM: Wednesday, 7 June 2023

US equity markets advanced despite a dearth of fresh catalysts, with small capitalisation stocks outperforming - Dow eked out a +10-point or +0.03% rise, with losses for Merck & Co Inc (down -2.74%) and UnitedHealth Group Inc (-2.13%) capping gains. Boeing Co lost -0.71% after the aerospace and defence company said it found new problems with its 787 Dreamliner jets. The defect, which is not a flight safety concern, is connected with a stabilizer fitting, and will lead the company to inspect every plane in inventory before delivery, the company said, adding that “at this time we do not expect that this issue will change our full-year guidance regarding 787 deliveries.” The broader S&P500 added +0.24% to 4,283.85, marking its highest close since 16 August, 2022 but falling just short of entering a technical bull market. A close above 4,292.48 for the S&P500 would mark a 20% rally off the bear-market closing low of 3,577.03 set on 12 October, 2022, meeting the widely accepted definition of the end of a bear market. Financials (up +1.25%) and Consumer Discretionary (+0.99%) led seven of the eleven primary sectors higher overnight. Regional bank stocks traded strongly as did bellwethers like Goldman Sachs Group Inc (up +1.55%) and Morgan Stanley (+2.53). More defensive Health Care (down -0.88%) and Consumer Staples (-0.47%) underperformed. The Nasdaq rose +0.35% to 13,276.42, the highest settlement for the technology-centric index since 20 April, 2022. Apple Inc slipped -0.% a day after the company debuted its highly anticipated virtual reality headset as well as new software at its annual Worldwide Developer Conference. The small capitalisation Russell 2000 rallied +2.69% to 1,855.40, logging its highest close since 9 March. The Russell 2000 has gained +5.4% so far in 2023, compared with an +11.6% gain for the large-capitalisation benchmark S&P 500 and a +26.8% jump for the Nasdaq. Coinbase Global Inc dropped -12.09% after the Securities and Exchange Commission (SEC) sued the cryptocurrency exchange, alleging it has been operating an unregistered securities exchange.