U.S. markets closed mostly higher on Tuesday as fresh all-time and closing highs continue to come into play. The intraday weakness led to a slight pullback in the blue-chips as tariffs and trade talks remained in focus.

However, volatility settled at its lowest level since late January and below a key level of support.

The Russell 2000 rose 0.7% while setting another intraday all-time and closing high of 1,664 into the closing bell.

The Nasdaq was up 0.4% after setting a fresh all-time intraday high of 7,644 while closing above the 7,600 for the second-straight session.

The S&P 500 was up 2 points, or 0.1%, after making a push to 2,752 but failed to hold resistance at 2,750 for a second-straight session.

The Dow traded in a tight 128-point range before slipping 0.1% with the session low tapping 24,710 and the index closing a shade below the 24,800 level.

Materials were higher by 0.8% to pace sector strength with Consumer Discretionary and Technology adding 0.6% and 0.4%, respectively.

Utilities, Real Estate, and Consumer Staples were sector laggards after declining 0.5% while Financials were off 0.4%.

Global Economy – European markets were mostly lower as Italy’s new prime minister outlined the coalition government’s vision for the eurozone’s third-largest economy.

The Belgium20 sank 0.9% and UK’s FTSE 100 was down 0.7%. The Stoxx 600 Europe gave back 0.3% while France’s CAC 40 slipped 0.2% higher.

Germany’s DAX 30 climbed 0.1%.

Eurozone May Markit services PMI was revised lower to 53.8 from the originally reported 53.9.

Eurozone April retail sales rose 0.1%, missing expectations of 0.5%.

The UK May Markit services PMI was up 1.2 to 54, stronger forecasts for a print of 53.

Italy’s newly installed Prime Minister Giuseppe Conte promised to implement fiscal policy priorities that include cutting corporate and individual taxes to as low as 15% and expanding welfare benefits to the country’s poor and unemployed.

Asian markets were mostly higher despite uninspiring economic data out of Japan and China.

Hong Kong’s Hang Seng, Japan’s Nikkei, and South Korea’s Kospi gained 0.3%. China’s Shanghai advanced 0.8% while Australia’s S&P/ASX 200 dropped 0.5%.

Japan April household spending fell 1.3% year-over-year, weaker than expectations for a rise of 0.8% and the biggest decline in a year.

The Caixin China services purchasing managers’ index was unchanged at 52.9 in May from the previous month’s reading.

Redbook Store Sales were up 4% for the year in the week ending June 2nd.

PMI Services Index climbed 2.2 points to 56.8 in the final May print, ahead of forecasts of 55.7. The employment component improved to 54.8 from 54.5 previously.

The composite index increased 1.7 to 56.6 from 54.9 in April. The employment component rose to 54.7 from 54.4 in April and represented the highest reading since May 2015.

The Institute for Supply Management’s non-manufacturing index was up 1.8 points to 58.6 in May, topping forecasts of 58.

The Labor Department’s Job Openings and Labor Turnover (JOLTS) survey showed job openings rose 65,000 to 6,698,000 in April, which is another new record high.

Expectations were at 6,543,000 job openings. The rate was steady at 4.3%. Hirings rose 92,000 to 5,578,000 With the rate rising to 3.8% from 3.7%. Quitters declined 36,000 to 3,351,000 while the rate was unchanged at 2.3%.

Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) rebounded and held positive territory throughout the session while testing a high of $120.16.

Resistance at $119.75-$120.25 held into the close with additional hurdles at $121-$121.50 and the 200-day moving average. Support at $119.50-$119 and the 50-day moving average.

Market Analysis – The Spider Small-Cap 600 ETF (SLY) was up for the fourth-time in five sessions following the push to $147.26 and fresh all-time high.

There is blue-sky territory towards $148-$150 on continued momentum following the break out of the recent trading range.

SLY closed at $143.19 for three-straight sessions prior to the current run with near-term support at $146.50-$146. A close back below $145 could signal a near-term top with risk to the $143.50-$143 area.

RSI is trying to clear and hold January and May resistance near 75.

Continued closes above this level would be a bullish signal for push towards 80-85. A move back below 70-65 would be a slightly bearish development.

The Utilities Select Spider (XLU) closed in the red for the 3rd-straight session after trading down to $49.36.

Fresh support at $49.50-$49.25 was breached but held with a close below the latter being a bearish development for lower lows.

Near-term resistance is at $49.75-$50 with additional hurdles at $50.25-$50.50 and the 50-day moving average.

RSI is trying to hold support at 40-35 with a move below the latter signaling additional weakness. Resistance is at 45 – 50.

All the best,
Roger Scott