Headline News: The S&P 500 futures are up 14 points and are trading 0.4% above fair value. The Nasdaq 100 futures are up 79 points and are trading 0.7% above fair value. The Dow Jones Industrial Average futures are up 119 points and are trading 0.4% above fair value. The market seems headed for a higher open with rebound momentum from last week’s rally as the biggest driving force. There’s a few pieces of relatively negative news that are not overpowering the rally effort. The International Monetary Fund released new projections indicating the U.S. will narrowly avoid a recession. The Bank of International Settlements warned about a global risk of stagflation. Also, San Francisco Fed President Daly noted that she sees additional tightening beyond the neutral rate. Separately, the G7 leaders are discussing import bans for Russian gold. This news comes as Russia experienced its first major foreign debt default since 1918. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 rallied sharply to move above resistance at 3900.86 and closed higher at 3911.74. The trading came with above-average volume, with 3,473,551,616 shares traded of which 83% was up volume. The only negative was RSI… Read More
Headline News: The S&P 500 futures are down 51 points and are trading 1.5% below fair value. The Nasdaq 100 futures are down 178 points and are trading 1.8% below fair value. The Dow Jones Industrial Average futures are down 353 points and are trading 1.1% below fair value. There has been no follow through to yesterday’s rebound effort, which is perhaps the biggest reason for the drop in the futures market this morning. The inclination to sell quickly into strength is undercutting investor sentiment once again along with concerns about economic prospects. The latter have shown up this morning in weakening commodity prices — copper futures are down 3.1% to $3.91/lb and WTI crude futures are down 4.8% to $104.73/bbl — and strengthening prices in the Treasury market. The 2-yr note yield is down 10 basis points to 3.12% while the 10-yr note yield is down 11 basis points to 3.20%. The weakness in gasoline futures (-2.1% to $3.71/gal) is also telling, as it comes on top of reports that President Biden is calling on Congress to suspend the national gas tax. Doing so could help provide some price relief at the pump, but at the same time, the… Read More
Headline News: The S&P 500 futures are up 55 points and are trading 1.4% above fair value. The Nasdaq 100 futures are up 181 points and are trading 1.4% above fair value. The Dow Jones Industrial Average futures are up 406 points and are trading 1.4% above fair value. The healthy bid in the futures market follows on the heels of steep losses for the major indices last week that were the worst since March 2020. In brief, it is a rebound effort for a deeply oversold market. Entering today, the major indices are down 9.4-11.7% for the month. Market participants appear to be looking through negative headline developments, like reports that COVID cases have increased in Shenzhen and Macau, increased calls pointing to higher probabilities for a recession in the U.S., and a bevy of headlines pinpointing the specter of more rate hikes on the way from many of the world’s leading central banks. The 2-yr note yield is unchanged at 3.18% and the 10-yr note yield is up three basis points to 3.27%. (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 closed the week with a higher close at 3674.84 along… Read More
Headline News: The S&P 500 futures are up 37 points and are trading 1.0% above fair value. The Nasdaq 100 futures are up 133 points and are trading 1.0% above fair value. The Dow Jones Industrial Average futures are up 252 points and are trading 1.0% above fair value. Central bank news is dominating the wires. The ECB is holding an emergency meeting to discuss fragmentation issues and presumably a response to cure them. Some see this as another “whatever it takes” moment, so European bonds and stocks have rallied on the news. The FOMC completes its two-day meeting today. The market expects a 75-basis point rate hike. The policy directive and summary of economic projections will be released at 2:00 p.m. ET and Fed Chair Powell’s press conference will follow at 2:30 p.m. ET. The Shadow Committee for the Bank of England reportedly expects a 50-basis point rate hike at Thursday’s meeting against expectations for a more modest 25-basis point increase. Reserve Bank of Australia Governor Lowe expects CPI to increase further and believes policy should respond to the CPI pressure in a decisive manner. The Bank of Japan continues to adhere to a yield curve control policy. The… Read More
Headline News: The S&P 500 futures are up five points and are trading 0.2% above fair value. The Nasdaq 100 futures are up 42 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 19 points and are trading 0.3% above fair value. A reassuring earnings report and outlook from Oracle (ORCL) provided a nice distraction from recent selling efforts. ORCL is up 12% in pre-market action. That has helped the futures trade, but the real catalyst for the uplift in the futures market is the significant weakness seen since last week. The S&P 500 is down 10.0% from its intraday high last Monday while the Nasdaq 100 is down 11.8%. The scope of those losses has stirred some hope that the market could be poised for a rebound effort, although talk of a potential “profit recession,” uncertainty about the ultimate impact of the Fed’s aggressive rate-hike approach, and unruly bond markets have curtailed buy-the-dip interest. Separately, the Fed is now expected to raise the target range for the fed funds rate by 75 basis points on Wednesday versus a previously expected 50 basis points. This can be seen in the fed funds… Read More
Headline News: The S&P 500 futures are down 94 points and are trading 2.4% below fair value. The Nasdaq 100 futures are down 370 points and are trading 3.3% below fair value. The Dow Jones Industrial Average futures are down 612 points and are trading 1.8% below fair value. The stock market is set for a sharply lower open with follow-through selling from Friday’s CPI-induced selloff. Worries about the Fed taking an even more aggressive rate-hike path have undercut risk sentiment along with a massive selloff in cryptocurrency markets, reports of renewed lockdowns in Shanghai and Beijing, and a brief inversion of the 2s10s spread overnight. It all centers around growth concerns, however, which feed directly into concerns about earnings estimates being subject to large downward revisions. Foreign markets have traded lower in the wake of Wall Street’s weakness and amid their own growth concerns. Bitcoin is currently down 13.9% to $23,642.00, feeling the added pressure of crypto lender Celsius announcing that it is pausing all customer withdrawals and transfers due to “extreme market conditions.” The 2-yr note yield is up 18 bps to 3.22%. The 10-yr note yield is up 11 bps to 3.27%. The U.S. Dollar Index is… Read More
Headline News: Inflation accelerated further in May, with prices rising 8.6% from a year ago for the fastest increase since December 1981, the Bureau of Labor Statistics reported Friday. The consumer price index, a wide-ranging measure of goods and services prices, increased even more than the 8.3% Dow Jones estimate. Excluding volatile food and energy prices, so-called core CPI was up 6%, slightly higher than the 5.9% estimate. On a monthly basis, headline CPI was up 1% while core rose 0.6%, compared to respective estimates of 0.7% and 0.5%. Surging shelter, gasoline and food prices all contributed to the increase. Energy prices broadly rose 3.9% from a month ago, bringing the annual gain to 34.6%. Within the category, fuel oil posted a 16.9% monthly gain, pushing the 12-month surge to 106.7%. Shelter costs, which account for about a one-third weighting on the CPI, rose 0.6% for the month and now are 5.5% higher from a year ago. Finally, food costs climbed another 1.2% in May, bringing the year-over-year gain to 10.1%. Those escalating prices meant workers took another pay cut during the month. Real wages when accounting for inflation fell 0.6% in April, even though average hourly earnings rose 0.3%.… Read More
Headline News: The S&P 500 futures are up 11 points and are trading 0.3% above fair value. The Nasdaq 100 futures are up 27 points and are trading 0.2% above fair value. The Dow Jones Industrial Average futures are up 64 points and are trading 0.2% above fair value. The positive bias comes on the heels of yesterday’s losses, which continued a roller-coaster week of trading action. Accordingly, today is a bit more of that roller-coaster action in a range-bound market ahead of tomorrow’s CPI report. A UBS upgrade of Tesla (TSLA) has been an instrumental support factor this morning. Some better-than-expected May trade data out of China has also been comforting; however, reports today that a southwest neighborhood in Shanghai has been locked down for COVID testing, and that entertainment venues in a Beijing district have been closed, have acted as mitigating factors. On a related note, there was a Bloomberg report that said Chinese regulators may be considering allowing the Ant Group IPO to move forward. Chinese regulators, according to CNBC, have denied that report, so a number of Chinese ADRs have seen a reversal into negative territory on the denial. A short time ago, the ECB announced… Read More
Headline News: The S&P 500 futures are down 14 points and are trading 0.3% below fair value. The Nasdaq 100 futures are down 25 points and are trading 0.2% below fair value. The Dow Jones Industrial Average futures are down 123 points and are trading 0.3% below fair value. The futures for the major indices are off their lows of the morning, but still trading with a cautious-minded disposition for various reasons that include a continued rise in crude oil futures ($120.65, +1.24, +1.0%), a Q2 profit warning from Credit Suisse (CS), a 10-yr note yield back above 3.00% (currently +5 bps to 3.02%), and another dour mortgage applications report, which featured a 7% wk/wk decline in purchase applications. General growth concerns remain a prominent headwind, and they were exacerbated today by reports pointing to the OECD slashing its 2022 global GDP view to 3.0% from 4.5%, the Atlanta Fed’s GDPNow model estimate for Q2 being cut to 0.9% from 1.3%, and the Reserve Bank of India raising its key policy rate by a larger-than-expected 50 basis points to 4.90% (a 40 bps increase was expected). (Michael Gibbs, Director of Equity Portfolio & Technical Strategy) Markets: The S&P 500 rallied… Read More
Headline News: The S&P 500 futures are down 33 points and are trading 0.8% below fair value. The Nasdaq 100 futures are down 141 points and are trading 1.1% below fair value. The Dow Jones Industrial Average futures are down 213 points and are trading 0.6% below fair value. This morning’s negative disposition is rooted in concerns about economic and earnings growth potential, which have been stirred by a larger-than-expected rate hike by the Reserve Bank of Australia (50 basis points to 0.85%), weaker-than-expected German factory orders for April, and Target (TGT) cutting its Q2 operating margin rate guidance in conjunction with a plan to reduce excess inventory. The bulk of the weakness in the futures market came ahead of Target’s warning, yet that warning has kept the pressure on since it is expected to be a harbinger of profit warnings from other retailers in coming weeks. Today’s economic calendar features the release of the April Trade Balance Report (8:30 a.m. ET) and the April Consumer Credit Report (3:00 p.m. ET). The 10-yr note yield is down one basis point to 3.03%. The 2-yr note yield is unchanged at 2.72%. WTI crude futures are down 0.3% to $118.11/bbl and… Read More
