(Justin Vaughn, Editor, Options Trading Report)
Even though the market staggered at the end of the month, and soared the last day, the indices were positive for the finish. A 575 point surge on Friday by the Dow Jones Industrial Average gave investors and traders a much needed ‘shot-in-arm’. As May finished, all three indexes were up, with the Dow Jones up 2.3%, the S&P 500 up 4.8% and the blazing Nasdaq Composite leading the charge, up 6.9%. Techs again came alive, with the Magnificent 7 and followers, some reaching high territory. As history has shown, Treasury yields fell lower with the 10-year yield closing at 4.512% down from 4.55%. “I love seeing a market like today, you’re seeing a return to normalcy”, said Jim Lydotes, head of equity income at Newton Investment Management. Stocks opened weaker Monday as the market reacted negatively to data that showed “the manufacturing sector” to be indicating signs of weakness. As the session ended, with the Dow Jones Industrial Average slipping, down 100 points both the S&P 500 and the tech heavy Nasdaq edged upward. Fresh data from the JOLTS report (Job Openings, and Labor Turnover Survey) is showing a leveling off in both categories. “The decline in job openings points to a slower pace of hiring in the months ahead. However, layoffs remain low, so net job growth should continue to be positive,” said Nancy Vanden Houten of Oxford Economics, writing Tuesday. More labor data is due throughout the week with the big news coming Friday: The Bureau of Labor Statistics will release numbers for May. With jobs growth leveling the past two years, economists are predicting unemployment to ‘hold-the-line’ finishing this year. Wednesday’s market opened strong with tech’s and the tech-heavy Nasdaq Composite blazing, leading the way. The S&P 500 and Nasdaq again touched record territory up 1.2% and 2% respectively. The conservative Dow Jones Industrial Average was up 0.2%, while the smaller value packed Russell 2000 closed at 2,063.87, up near 30 points.
Nvidia has joined both Apple and Microsoft as ‘Trillion dollar’ corporations, with Nvidia skyrocketing from $1 trillion level just a year ago and now hitting the $3 trillion value in 2024. As the techs charge ahead, bonds lose attention, as the 10-year Treasury note has fallen the last five days to 4.269%, struggling to stay even. Scattered earnings reports are driving many company’s shares higher, many of which are out of the tech sector. With many tech favorites ‘flying high’ and giving the market impetus, non techs feed off the frenzy. “I think it’s really just more of a momentum play at this point,” said Steve Courtney, portfolio manager at PGIM Quantitative Solutions. Bitcoin was stronger, rising $829.81 to $71,314.05, while Ethereum followed suit, mirroring the giant, hitting $3,840.21. The cryptocurrency markets have been overshadowed in the past few months by the overwhelming interest in the technology sector. Gold has plateaued, with prices hovering in the $2,354 range as serious market fears have subsided a bit, with silver holding firm at $30.572. Gold’s ‘little sister’ is a tag-along to gold, following its trends in the metals market. Copper is strong at $4.64 a pound, with world-wide demand at an all time high.
A gigantic $76 billion deal with the National Basketball Association with a Television contract is being constructed with Amazon and NBC and Peacock major players. “Entertainment is a swamp, and sports is the only firm ground,” said former Fox Sports chief David Hill.
RUMBLINGS ON THE STREET
Wylie Tollette, chief investment officer of Franklin Templeton Investment Solutions, Barron’s “The Fed is willing to be patient until they’re convinced that inflation is good and dead. It’s clear that they’ve been looking at what happened in the 1970’s when the Fed took its foot off the brake too soon and inflation came roaring back.”
Lara Rhame, chief U.S., economist at FS Investments, Barron’s “All the hand wringing about a slowdown in the labor market has been premature. People have a tendency to mistake normalization for weakness, when in fact the labor market remains quite strong. The economy is like an 18-wheeler–it has a lot of momentum going along. In prior cycles when the Fed slammed on the brakes [by raising interest rates], that probably hit eight or 10 of those wheels. I’d argue that this time around, it’s only braking on four or six of the 18 wheels.”
Jason Bottenfield, Wealth Manager at Park Cities Group at Steward Partners, WSJ “It’s a tough place for the Fed. It’s going to be hard for them to cut until they see something that reverberates, such as a rising unemployment rate.”
Mike Schmidt, director of the Chips Program Office, in a statement, WSJ “Because of the Chip Act, every company capable of producing leading edge semiconductors at scale is now expanding in the United States, and we have bolstered our country’s supply chain resilience and national security,” said Mr. Schmidt.