The stock market finished mixed today as a strong rally across memory and semiconductor stocks was offset by continued weakness in several mega-cap technology names, while broad strength across cyclical and defensive sectors kept the underlying tone constructive. The S&P 500 finished flat, the Nasdaq Composite (-0.5%) finished modestly lower, and the DJIA (+0.1%) eked out a gain after touching another all-time intraday high.

Micron (MU 1213.56, +165.05, +15.74%) was among the session's top performers after delivering a stellar beat-and-raise earnings report that reinforced exceptionally strong demand across the memory market. The results sparked broad gains among memory-related names and helped the PHLX Semiconductor Index finish 3.6% higher, though not before the group endured another volatile session that saw the index surrender an opening gain of more than 5% before recovering into the close.

However, the same memory-pricing dynamics that benefited Micron weighed on several of the market's largest technology companies. Apple (AAPL 275.15, -17.93, -6.12%) and Microsoft (MSFT 352.83, -12.63, -3.46%) were among the weakest Dow components after both companies announced price increases tied to rising memory costs, while Amazon (AMZN 227.01, -7.26, -3.10%) and Alphabet (GOOG 342.19, -2.85, -0.83%) also finished lower.

As a result, the information technology (-0.1%), consumer discretionary (-1.8%), and communication services (-1.0%) sectors all lagged despite the strength across semiconductor stocks. The Vanguard Mega Cap Growth ETF declined 1.0%.

Away from mega-cap technology, the market continued to broaden. Six S&P 500 sectors finished higher, reinforcing the recent rotation into other areas of the market rather than away from equities altogether.

The industrials sector (+2.2%) captured the widest gain, with Caterpillar (CAT 1056.83, +62.38, +6.27%) notching all-time highs and finishing as the best-performing Dow component amid another strong session for industrial machinery names.

The health care sector (+1.5%) also outperformed, led by Bio-Techne (TECH 70.67, +11.80, +20.03%), which surged after agreeing to be acquired by Merck KGaA (MKKGY 33.59, +1.74, +5.46%) for $73 per share in cash.

The materials sector (+1.4%) benefited from strength across fertilizer and metals producers, while the energy sector (+1.0%) rebounded alongside crude oil after yesterday's retreat.

The S&P 500 Equal Weight Index (+0.6%) outperformed its market-weighted counterpart once again.

Outside the S&P 500, the Russell 2000 (+0.5%) and S&P Mid Cap 400 (+0.7%) also finished higher.

Overall, today's session continued to reinforce the market's evolving leadership. While elevated volatility persists across mega-cap technology stocks, strength has steadily broadened beneath the surface, with the DJIA's year-to-date gain (+8.0%) now surpassing that of the S&P 500 (+7.5%) as investors continue rotating within the equity market rather than exiting it. The contrasting reactions to Micron's earnings also underscored how the AI trade is becoming increasingly nuanced, with surging memory demand benefiting suppliers while simultaneously creating cost pressures for some of the market's largest technology customers.

U.S. Treasuries of most tenors recorded their third consecutive day of gains while the long bond underperformed, ending with a slight loss. The 2-year note yield settled down two basis points to 4.12%, and the 10-year note yield settled down one basis point to 4.39%. 

• Russell 2000: +21.2% YTD
• S&P Mid Cap 400: +15.7% YTD
• Nasdaq Composite: +9.1% YTD
• DJIA: +9.0% YTD
• S&P 500: +7.5% YTD

Reviewing today's data:

• May Personal Income 0.7% (Briefing.com consensus 0.3%); Prior 0.0%, May Personal Spending 0.7% (Briefing.com consensus 0.3%); Prior was revised to 0.4% from 0.5%, May PCE Prices 0.4% (Briefing.com consensus 0.4%); Prior 0.4%, May PCE Prices - Core 0.3% (Briefing.com consensus 0.3%); Prior was revised to 0.3% from 0.2%
  • The key takeaway from the report is that, first, there weren't any headline shocks for the PCE price indexes. They were in line with expectations, allowing participants to assume that next month's readings will look better given the sharp decline in oil prices. Secondly, real PCE was up 0.3% month-over-month, demonstrating that spending was driven by increased demand and not just higher prices. This will be a nice input for Q2 GDP forecasts.
• Q1 GDP - Third Estimate 2.1% (Briefing.com consensus 1.6%); Prior 1.6%, Q1 GDP Deflator - Third Estimate 3.6% (Briefing.com consensus 3.5%); Prior 3.5%
  • The key takeaway from the report is that Q1 GDP was stronger than originally thought, due primarily to a downward revision to imports, which are a subtraction in GDP calculations.
• May Durable Orders -4.5% (Briefing.com consensus -3.2%); Prior was revised to 8.5% from 7.9%, May Durable Goods 0 ex transportation 1.3% (Briefing.com consensus 0.5%); Prior was revised to 1.4% from 1.1%
  • The key takeaway from the report is that there was a healthy pickup in business spending in May, evidenced by the 1.6% increase in new orders for nondefense capital goods excluding aircraft.
• Weekly Initial Claims 215K (Briefing.com consensus 225K); Prior was revised to 227K from 226K, Weekly Continuing Claims 1.821 mln; Prior was revised to 1.800 mln from 1.810 mln
  • The key takeaway from the report is that initial jobless claims continue to track at low levels, offering a nice cue that suggests the labor market, overall, remains on solid ground.