The Surging Indexes – by Justin Vaughn

(Justin Vaughn, Editor, Options Trading Report)

At Friday’s close all three indexes stood near records, as the market was sizzling. The Dow Jones Industrial Average was up 1.2%, the S&P 500 and Nasdaq Composite were up !.5% and 2.1% respectfully. For the month of May the S&P 500 was up 5.3%, with nearly all equities in the positive. “The market is very keyed in on this notion of a soft landing, and most data points we’ve received have been completely consistent with that,” said Mike Medeiros, Macro Strategist at Wellington Management.

Monday opened flat, with the Dow Jones and S&P 500 waffling most of the day, then ‘catching fire’ with the indices nearing records. The Nasdaq climbed upward as a few favorite high techs thrust the tech-heavy index to record territory. Inflation concerns have waned, with investors and traders feeling the Federal Reserve will slash interest rates yet this year. According to FactSet all indexes are up 5.4%R, with the S&P 500 surging 5.7%. In market news coming Tuesday, a spate of retail earnings reports and Wednesday’s release of the FOMC (The Federal Open Market Committee) minutes of its “monetary-policy meeting of April 30-May 1,” will give evidence of the effects of inflation and its direction, and a retail quarterly report detailing consumer spending will show current spending habits, all of which will influence the committee’s thinking on possible interest rate hikes. “Not only didn’t we have a recession, we had a robust economy with tight labor markets, healthy consumers who were consuming,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management.

Wednesday’s market was lethargic on opening, anticipating the release of Nvidia’s earnings, which were…..explosive. It wasn’t enough to sustain a positive market as the indexes slid…and the Dow Jones Industrial Average fell 1.5%, nearly 600 points. Other negative news outweighed positive Nvidia results, as inflation news eclipses all else in the market. Bonds have settled back as stocks overall have moved upward per the indexes. The 10-year Treasury yield drifted a bit higher hovering at 4.479%, as equities were squeamish. Oil was quiet at $76.98 slipping off the $79.95 last week, unusually weaker as one might think the world wide conflicts would pressure oil upward, but not so. Even the Israeli/Hamas conflict so far, has not driven oil prices higher, as oil has been steady, with pump prices in the $3.69-$3.79 range, with driving season upon us.

Copper has taken center stage as prices have escalated to nearly $10,000 a ton at $9,640, up from $8,869 just last month. One of the oldest metals, copper is poised to ”run off the charts.” Heavy demand from manufacturing of electric vehicles, construction of homes and commercial buildings, use in high tech electronics and a multitude of uses has strained all producers. Copper has led all commodities appreciating consistently for the last two years. Some copper analysts are calling for prices to exceed $15.000 in the coming six months. Ultimately Mr. and Mrs. consumer will pay the price, as usual.

Gold and Silver are shining, leading the commodities markets (along with…Copper). Silver has moved steadily upward, trading at $32.29 an once, mirroring gold’s recent run. Gold is up 18% this year and silver is up a whopping 35%. Both metals are again in the consumers’ eye, looking for safe haven investments and price appreciation. Gold closed Thursday at $2,371.

Liz Sonders, chief investment strategist at Charles Schwab, WSJ “We sort of have a bull market in lots of different things. There are plenty of times where bonds and stocks do well, but that’s usually not a backdrop where gold does well. That’s kind of a manifestation of being bullish on everything.”

Katheryn Russ, an economics professor at the University of California, Davis, WSJ “Its a tax. Somebody has to pay it. It’s a question of who. It’s been really hard for economists to say definitively how much of the cost of the tariffs is going to translate into higher end-retail prices.”

Jeff Fieldhack, Counterpoint’s research director for North America, Barron’s “Considering we’re still really at the beginning stages of the coming GenAI smartphone boom, there is plenty of runway for more growth.”

Morgan Bazilian, director of the Payne Institution at the Colorado School of Mines, WSJ “China is not just standing still waiting for us to catch up. They are making investments on top of their already massive investments in all aspects of the critical-minerals supply chain.”