Right at the midpoint of June, Biogen (BIIB) has been the top-performing Russell 1,000 stock month to date.  BIIB has rallied 48.08% thanks to a huge move higher earlier in the month when the company received the first approval from the FDA for their Alzheimer’s treatment. With only a couple of weeks since that massive move higher, the stock has pulled back from its highs but remains extremely extended above its 50-DMA.  Looking across the other top 20 best-performing stocks in the index, BIIB is far from being the only Health Care stock.  In fact, most of the best performers so far in June come from the Health Care, Tech, or Energy sectors.  Additionally, many of these other stocks have also soared well above their 50-day moving averages, although there are a couple of exceptions.

One of those is the second-best performer in the index: Iovance (IOVA).  IOVA is another Health Care stock that has experienced huge swings on news surrounding regulatory concerns.  In May, the FDA requested additional potency data from the company which was followed by an announcement that the CEO would be stepping down.  That sent the stock collapsing almost 40% on May 19th.  After a bit of sideways movement through the second half of May and into June, IOVA has nearly recovered those losses, but that still leaves the stock well below its 50-DMA and nearly cut in half YTD. Fastly (FLSY) and Rocket Cos (RKT), and NRG Energy (NRG) are the only other best performers that are also either below or within single-digit percentage points of their 50-DMAs even after the huge gains this month.

Looking at the other end of the performance spectrum, the 20 worst-performing stocks in the index, there are 11 that have fallen double digits in June. The worst of these is Upstart (UPST) which has fallen 17%. This month’s decline has brought UPST right back down to its 50-DMA whereas most of the other worst-performing stocks have fallen much further below their 50-DMAs. Granted, UPST is also the top-performing Russell 1,000 stock year to date having rallied over 200%, and it is up even more, 441.51%, since its first day of trading in mid-December.  Most of the other worst performers are also still up on the year, but not nearly to the same extent.  Click here to view Bespoke’s premium membership options.

Lumber prices have continuously been in focus over the past several months as the commodity has gone on a historic run, but over the past month, front-month lumber futures have collapsed over 40% with an 11.7% decline in the past week alone.  Today the commodity is seeing a bit of a bounce after coming within 10% of its 200-DMA at the intraday lows and the bottom of the volatile uptrend of the past year.

As lumber prices have been on the decline, mortgage rates have also generally been on the decline, but that has done little to bolster homebuilder sentiment. While it is still at historically elevated levels, the NAHB’s reading on homebuilder sentiment has also been falling, dropping another 2 points in June to 81.  That is still well above any pre-pandemic record, but that drop in addition to the past few months of declines have brought it to the lowest level since last August.

The indices for present and future sales and traffic all experienced identical-sized declines in June.  While not to say it is a weak reading, the index for future sales is only in the 91st percentile of readings which is less elevated within its respective historical range than present sales or traffic.

Looking across each of the four regions highlighted in the report, it is more of the same story.  Sentiment remains at historically strong levels although off of records set several months ago.  The region that has held up the best has been the South.  While also lower month over month, the index tracking this region only fell 1 point in June and remains in the 97th percentile.  The Midwest saw an equal-sized decline, but that is in the context of a more consistent string of declines since late last year.

As for homebuilder stocks, as proxied by the iShares Home Construction ETF (ITB), there has also been a downtrend over the past month with the ETF dropping around 13.5% from its intraday high on May 10th.  At the moment, ITB is in a bit of no man’s land between its 50 and 200-DMAs and also has further downside until it tests the past year’s uptrend line.  Click here to view Bespoke’s premium membership options.

The first of the monthly regional Fed readings on the manufacturing sector was released this morning out of the Empire State.  The headline index fell to 17.4 from 24.3 in May.  While the 6.9 point decline sat in the bottom quintile of all monthly moves and it was a 5.3 point larger drop than had been forecast, the current level still would be the highest since November 2018 outside of the past few months.  Additionally, in spite of the decline in current conditions, expectations saw a significant uptick rising 11.1 points to the highest level in exactly a year.  Prior to last June, February 2018 was the last time the index has seen as strong of a reading.

Given the decline in the headline number, the vast majority of categories also declined in June, although almost all remained positive signifying that they continue to grow at a healthy clip. Of the current conditions indices, Delivery Times was the sole index to move higher, and that is not necessarily a good thing as higher readings indicate longer lead times.  Meanwhile, the declines for New Orders, Shipments, and Unfilled Orders were particularly large all ranking in the bottom decile of monthly moves.

Staying on the topic of these same indices, similar to the headline reading, although current conditions deteriorated, businesses reported pretty optimistic results for the future. Six-month expectations for New Orders and Shipments both saw sizeable month-over-month increases of 9.2 and 9.1 points, respectively, whereas the current conditions indices moved in the opposite direction. Those moves left each index at the high end of the past several years’ ranges.  Staying on the topic of expectations, the index for Unfilled Orders was particularly interesting.  The past few months have seen some of the highest readings on record in the current conditions index meaning businesses have been reporting massive builds in order backlogs.  While backlogs continue to grow with the current conditions index remaining positive, the index for expectations tipped negative for the first time since October meaning businesses foresee those backlogs to finally begin to decline in six months.  Additionally, businesses reported a draw in inventories for the first time since January.

One likely culprit of those backlogs is delivery times.  The index saw yet another record high in June. On the bright side, businesses seem to point to normalization in supply chains down the road as expectations plummeted by 14.5 points; the third-largest month-over-month decline on record behind March 2011 and September 2001.

Prices continue to rise at a rapid pace according to responding businesses, though, there was some deceleration in prices paid and received in June.  The only measure of prices that moved higher this month was expectations for prices received which rose to the highest level since the summer of 2008.

One other interesting part of the report was the response around employment metrics.  The index for current conditions for the average workweek remains around some of the highest levels of the past decade even after pulling back month over month. Businesses also slowed hiring as the index of the number of employees fell to 12.3. While that reading is still off pre-pandemic highs, expectations continue to surge, setting another record high. Together this seems to indicate that businesses have a desire and in the future expect to take on more workers in spite of actual progress in doing so more recently.  Click here to view Bespoke’s premium membership options.