Morning Brief
Headline News:
The S&P 500 futures are down 21 points and are trading 0.4% below fair value, the Nasdaq 100 futures are down 110 points and are trading 0.6% below fair value, and the Dow Jones Industrial Average futures are down 71 points and are trading 0.2% below fair value.
The current disposition of the futures market implies a down open for the major indices. Losses will be relatively modest in scope, but the buying impulse has been quieted in the wake of major semi company’s AI platform announcement at its GTC Conference and the Bank of Japan’s decision to exit its negative interest rate policy, which had been in place since 2016, and to end its formal yield curve control policy. The BOJ still made it clear, however, that it will stick with an accommodative monetary policy.
That’s not to say investors were truly disappointed by these developments, only that they probably have some headline fatigue given all of the talk/previews/speculation ahead of these events. They are also cognizant that the Fed is on deck now, ready to release a new dot plot on Wednesday that may or may not show a change in its median rate-cut projections for 2024.
Separately, the Reserve Bank of Australia left its cash rate unchanged at 4.35%, as expected.
The 2-yr note yield is down two basis points to 4.71%, and the 10-yr note yield is down two basis points to 4.32% in the wake of the BOJ announcement and ahead of the February Housing Starts and Building Permits Report at 8:30 a.m. ET. The U.S. Dollar Index is up 0.5% to 103.91, with USD/JPY pushing above 150.00 (currently 150.42) after the BOJ news. WTI crude futures are flat at $82.75/bbl.
(Michael Gibbs, Managing Director, Lead Portfolio Manager)
Markets:
The S&P 500 closed lower at 5,149.42 and is now in the middle of the seven-day base. The RSI index closed higher, a positive divergence that could lead to a higher close today. We believe the S&P 500 will trade within the current trading range of 5,189.26-5,111.06 for a few more days before we potentially run at the all-time high of 5,189.26.
We are currently Intermediate-term bullish and short-term bullish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategist
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
.The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term timeframes. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author, John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to buy or sell any company’s stock mentioned above.
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The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange, and it is not an index of U.S.-based companies.