Morning Brief
Headline News:
The S&P 500 futures are up 15 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 60 points and are trading 0.3% above fair value, and the Dow Jones Industrial Average futures are down 38 points and are trading 0.1% below fair value.
Early trading has a mixed disposition. Pre-open gains in the mega-cap space have bolstered contracts linked to the S&P 500 and Nasdaq 100, while futures tied to the Dow industrials are lower.
Market participants are digesting news that President-elect Trump said he will impose large tariffs on imports from Canada and Mexico and increase tariffs on Chinese imports.
Buying interest in the 10-year Treasury note, which is most sensitive to changes in inflation, dissipated following the tariff news. The 10-year yield is up one basis point to 4.28%, while the 2-year yield is down three basis points to 4.24%.
Retailers that reported earnings since yesterday’s close have garnered mixed responses.
(Michael Gibbs, Managing Director, Lead Portfolio Manager)
Markets:
The S&P 500 rallied up to the all-time high at 6,017.31, but the sellers came in swiftly, and the index closed lower at 5,987.37. The RSI index did not test an old high and closed slightly higher at 63.13. So, achieving a new all-time high this week could be difficult. However, the ten-year treasury closed at a yield of 4.28% and below the support at 4.29%. A continued move lower in the yield could be bullish for equity markets, potentially bringing in new buyers soon. The best-case scenario is for the S&P 500 to form a small base at these levels to close out the week.
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 averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. 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.
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed due to the federal government’s timely principal and interest payment. Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall, and when interest rates fall, bond prices generally rise.
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 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 focuses on smaller companies that focus on the U.S. market.