Daily Market Notes | 5-minute read

July 1, 2024

By Donald Selkin | Chief Market Strategist

DOW: 39,138.42

S&P: 5461.32

Nasdaq: 17,788.21

10YR T-Note: 4.47%

Bitcoin: 62897

VIX: 12.82

Gold: $2336.8 Crude Oil: $82.68

Prices Current as of 11:50 am

Source: CNBC

40+ Years on

Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.

The first half of the year finished in a strange way on Friday with strong gains fading away sharply as the session neared a close and most of the leaders got pummeled as a result.

This goes to show that sometimes what goes on in the market has nothing to do with fundamentals and instead is just a matter of trading for no other reason than investors just want to push stocks one way or the other.

For instance, the Dow began with a 279 point advance and then had the nerve to end with a 45 point closing decline hurt by some of the technology leaders such as AAPL, MSFT, AMZN plus MCD.

The same pattern hit the S&P, which turned a large 41 point mid- morning advance into a terrible close of down 22 to 5460 led by the same selling in the first three stocks mentioned above in addition to NVDA which were all strongly higher for most of the session. This index ended a three-week winning streak as a result of the late dive.

And repeating the same story, the Nasdaq also gave up an early advance of 177 and ended lower by 126 on the same issues doing terrible right on the close and the only ones that held up were AVGO which had come way down by around 14% in addition to AMD which appeared to be trying to steady itself after a long trip down as well.

For some out of whack reason, the Russell 2000 Index of small stocks ended higher by 9 to 2047 and this was probably a function of the bank stocks doing really well as a result of the Fed stress tests.

The VIX, which had gotten as low as 11.87 on that morning large advance in equity indices, ended a little higher at 12.44 due to the late selling. But despite the downbeat finish, the S&P and the Nasdaq remain near their all-time highs.

The late-afternoon burst of selling may reflect traders taking profits, with the market near all-time highs, or rebalancing their portfolios as the second quarter came to a close.

The market headed higher in the early going following the closely watched P.C.E. report that showed inflation has continued to ease. Investors are hoping that cooling inflation will prompt the Federal Reserve to start cutting interest rates, which remain at their highest level in more than 20 years.

The report showed that consumer prices rose 2.6% in May compared with a year ago, which signaled continued easing from a 2.7% reading in April and is sharply lower than the peak reading of 7.1% two years ago.

The PCE is the Fed’s preferred measure of inflation and the latest reading is encouraging for economists and investors who are hoping for rate cuts to help ease pressure on the market and borrowers, and the bet is that the Fed will start cutting interest rates at its meeting in September.

Treasury yields rose in the bond market after initially losing ground following the latest signal of easing inflation. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, rose to 4.38% from 4.30% just prior to the release of the PCE data. The yield on the two-year Treasury, which more closely tracks expectations for Fed actions, rose to 4.74% from 4.72% just prior to the data’s release.

The Fed raised interest rates to their highest level in more than two decades in an effort to tame inflation back to its 2% target. Other measures of inflation, including the well-known consumer price index have also confirmed that pressure on prices has been easing. Consumers are still feeling pressure from inflation, despite the significant easing from its peak, and recent data has shown that spending is weakening and weighing down economic growth. The Fed’s goal was to slow economic growth enough to curb inflation, but not so much that the economy slips into a recession.

The strong jobs market has been another big factor driving economic growth, but that has also shown signs of weakening and therefore this Friday’s June non-farm payroll report will be very important in that sense. And so will the June JOLTS report tomorrow.

Dow component NKE tumbled 20% for the biggest decline among S&P stocks after the shoe and athletic wear company missed revenue targets and cut its full-year sales guidance. Company executives said they expect sales to decline by single digits in the current fiscal year, citing a “challenging” environment.

Their dour outlook dragged other athletic apparel companies down with it as FL, UA and SKX went lower as well.

More retailers, especially those focusing on discretionary items, have been warning about a slowdown in consumer spending. Consumers barely increased spending in May from April, according to the latest government retail sales report.

The S&P closed out its final trading day of June with a 3.5% gain for the month. The index is up about 14.5% so far this year.

The Nasdaq gained about 6% for the month and is up 18.1% this year.

Earnings this week are light with the following: Wednesday – STZ.

Economic reports will see: today – May Construction Spending; Tuesday – May JOLTS report; Wednesday – May trade balance, May factory orders; Friday – June non-farm payroll report for which the prediction is 190K.

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