US close: Stocks edge higher ahead of PCE data, but Walgreens tanks

dl new york stock exchange us markets wall st wall street nyse dow jones industrial average sp500 trading unsplash — Sharecast / Aditya Vyas via Unsplash

US stocks closed with minor gains on Thursday with investors showing caution amid a barrage of mixed economic data ahead of Friday's key PCE inflation report.

The Dow and S&P 500 both finished up just 0.09% while the Nasdaq gained 0.30%, with the latter two indices inching closer to last week's record highs.

Eyes were turning to Friday's release of the US core personal consumption expenditures index – the Federal Reserve's preferred gauge of inflation – which is expected to show that the annual rate of core PCE inflation eased to 2.6% in May from 2.8% the month before.

“US stocks have rediscovered some of their upward momentum this afternoon, though we are now less than 24 hours away from tomorrow’s PCE price data," said Chris Beauchamp, chief market analyst at IG.

"Should this point towards a further slowdown in price growth then the final day of June trading might go the same way as May’s, which saw a strong rally. A softer PCE reading could renew hopes of a September rate cut, which have taken a knock of late.”

Economic data comes in mixed

Initial jobless claims fell to 233,000 in the week ended 21 June, down from 239,000 the week before, coming in below the consensus forecast of 235,000. Claims declined for the second week after hitting a 10-month high of 243,000 in the first week of June. However, both the four-week moving average and continuing claims data for the previous week both rose.

Durable goods orders rose by just 0.1% in May following a revised 0.6% gain the previous month, though that was better than the 0.1% decline predicted by analysts.

Housing data for May continues to miss expectations, with pending home sales following the trend set by housing starts, building permits and new home sales over the past week. Pending sales dropped by 2.1% over the month, easing from the 7.7% slump in April but well below the 2.5% growth expected by the market.

Meanwhile, revisions to GDP growth for the first quarter meant the US economy expanded at an annualised rate of 1.4%, up from the preliminary reading 1.3% but still down from 3.4% in the preceding three-month period.

Market movers

Second-quarter earnings season is now well underway – though doesn't really pick up for a couple of weeks when the big banks report.

Shares in Walgreens Boots Alliance plunged 22% after the pharmacy retail chain lowered its full-year profit guidance which it blamed on challenging industry trends and a worse-than-expected consumer environment in the US. The company is now guiding to adjusted earnings per share of $2.80-2.95 for its fiscal year ending 31 August, compared with an earlier prediction of $3.20-3.35.

Micron Technology shares were down 7% after the data storage group disappointed investors with its sales guidance after the bell on Wednesday. The company guided to revenues of $7.6bn for the current quarter, which was in line with expectations but may have underwhelmed investors following the stock's 70% surge since early January.

Food ingredients maker McCormick gained 4% after reassuring the market with an in-line set of quarterly figures, though full-year earnings forecasts were lowered slightly.

Denim brand Levi Strauss dropped 15% despite only marginally missing consensus forecasts with a 8% year-on-year rise in quarterly sales, as chief financial officer warned in an interview that consumers were "generally cautious". The share-price fall follows a 40%-plus gain in the stock so far this year.

Tech stocks were performing well, with Salesforce, Amazon.com, Cisco and Apple among the best performers on the Dow, while Nike edged higher ahead of the sporting goods giant's results after markets close.

Dow Jones - Risers

Salesforce.Com Inc. (CRM) $253.04 4.07%
Boeing Co. (BA) $182.51 2.25%
3M Co. (MMM) $103.17 1.70%
Cisco Systems Inc. (CSCO) $47.45 1.26%
JP Morgan Chase & Co. (JPM) $199.17 0.88%
Travelers Company Inc. (TRV) $206.95 0.59%
Unitedhealth Group Inc. (UNH) $486.44 0.50%
Apple Inc. (AAPL) $214.10 0.40%
Amgen Inc. (AMGN) $313.69 0.28%
Chevron Corp. (CVX) $156.33 0.24%