Morning Brief
Headline News:
Equity futures point to a lower open this morning as semiconductor stocks face pressure in the premarket while lingering hostilities between the U.S. and Iran send oil prices higher. Both semiconductors and oil contributed to considerable choppiness last week, with the S&P 500 and NASDAQ Composite notching solid weekly gains, while the DJIA faced a modest loss.
Crude oil is currently up $2.43 (+3.4%) to $73.84 per barrel after the U.S. and Iran traded strikes over the weekend. Iran maintains that the Strait of Hormuz is closed (and attacked a commercial ship traveling the waterway), though Bloomberg reports that a southern route remains open.
Meanwhile, semiconductor stocks are under pressure after shares of a large semiconductor moved sharply lower following a successful ADS debut on the NASDAQ on Friday.
There are no earnings on the calendar today, but tomorrow will effectively kick off the Q2 earnings season with a slate of major banking names.
Similarly, there are no economic data releases of note today, though tomorrow will feature the June CPI (Briefing.com consensus -0.1%).
(Michael Gibbs, Managing Director, Lead Portfolio Manager)
Markets:
The S&P 500 rallied for a second consecutive session, closing at 7,575.39, just below the resistance level at 7,577.92. Trading volume remained below average, with advancing volume accounting for only 58% of total volume, indicating that buying conviction was still somewhat limited.
Despite the modest volume, the technical picture continues to improve. The RSI and the Advance/Decline line remain in established uptrends, while the 10-day, 20-day, and 50-day moving averages have all turned higher. These are constructive signals that suggest the intermediate-term trend remains positive.
We believe the market is beginning to price in a favorable second-quarter earnings season, which gets underway this week. So far this morning, S&P 500 futures are down 0.40% as renewed tensions involving Iran, including reports that Iran is again threatening to close the Strait of Hormuz, weigh on investor sentiment.
Initial support is expected near the 10-day moving average at 7,490.33, and we believe that level is likely to attract buyers if it is tested today.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
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 due to underlying commodity 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 the underlying index’s internal strength or weakness. 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 Russell 3000 Index’s total market capitalization.
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 comprising 103 equity securities of 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange and not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it tracks smaller companies that operate in the U.S. market.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure serves as an indicator of market breadth and reflects the extent to which price movements are broadly distributed across NYSE-listed securities.