Daily Market Notes | 5-minute read

June 26, 2024

By Donald Selkin | Chief Market Strategist

DOW: 39072.60

S&P: 5,462.32

Nasdaq: 17,746.83

10YR T-Note: 4.31%

Bitcoin: 61404.3

VIX: 12.86

Gold: $2313.7

Crude Oil: $80.82

Prices Current as of 11:27 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.

Well, well, well – after the 13% downside correction for NVDA, it finally got its act together yesterday and made a nice upside recovery yesterday on huge volume of 400 million shares.

This led to a reversal of the recent pattern where the Dow gained strongly for three sessions while the Nasdaq and S&P got sold off to narrow what had been the historic separation between these items as already mentioned in prior emails.

And it was notable that most of the “experts” who were asked about it while it was declining said that they were not interested in buying as it was going lower, but when it was flying to the upside earlier this month and year, they were jumping to get on in the old – buy when a stock is going higher and don’t touch it while the same stock is selling off to get in at a better price.

As a result of this, the Nasdaq rose a large 220 points to 17,717 and the S&P gained 21 to 5469, both approaching their all-time highs while the Dow got clocked for 299 down to 39,112 after its recent strength.

The Russell 2000 Index of small stocks eased back by 8 to 2022 while the VIX came back down to 12.84 as it hovers at the low end of its range.

Such strength came even as most stocks outside the frenzy around artificial-intelligence technology fell.

NVDA rose by 6.8%, and without that gain, the S&P would have dropped to a loss for the day. The chip company’s shares snapped a three-day losing streak where they had lost nearly 13% for their worst such stretch since 2022. The Nasdaq was also helped by gains in its other two giants, namely NSFT and AAPL, in addition to META and GOOG, which has gotten strong lately.

The Dow suffered mainly because of a large decline in the shares of HD, in addition to BA, GS which came down from a record high on its own plus UNH which swings in opposite directions on a day to day basis. The supposed “explanation” for the drop in HD was that a little-known pool manufacturer, namely POOL, announced a very weak forecast which now meant that people will not be spending money on other home repair items, so what happens if you need a new dishwasher or refrigerator? This argument appears a little specious and really does not make sense, but it sort of fits into the narrative for one stock that by itself resulted in a 120 point loss by the Dow.

The recent struggles for NVDA haven’t caused too many concerns, at least not yet. Part of that is because its 13% dip over three days was nothing compared with its 1,000% surge before that since autumn 2022. Market watchers have also been hoping for more stocks to participate in the rising stock market rather than just it and a handful of AI winners.

That’s what happened Monday, when banks, oil companies and other stocks outside the AI boom rallied as NVDA sank. But it may be a challenge for such stocks to keep picking up slack from AI darlings depending on how much more the U.S. economy’s growth slows.

SEDGE dropped by 20% after it said a customer that owes it $11.4 million filed for Chapter 7 bankruptcy, which raises questions about how much the solar-power company can collect and when. The smaller solar-related companies in the Russell 2000 index also fell.

Broadly, sales at retailers have been up and down recently as companies highlight how the struggles by lower-income consumers are dealing with still-rising prices. The job market, though, still looks mostly solid. The June Consumer Confidence reports showed a slight decline, but not by quite as much as economists expected.

Upper-income households seem to be doing better, as CCL gained 9% after it raised its profit forecast for 2024. The cruise company said bookings for the rest of the year are the best on record in terms of both price and occupancy. And bookings for next year may end up even better.

In the bond market, Treasury yields held relatively steady. The yield on the 10-year Treasury remained at 4.23%, where it was late Monday.

It’s been mostly falling since topping 4.70% in late April, which has relaxed the pressure on the stock market. Yields have sunk on hopes that inflation is slowing enough to convince the Federal Reserve to cut its main interest rate later this year.

Investors have been itching for the first cut to interest rates, with many traders betting on it arriving in September. But stocks don’t always rise afterward. Since 1974, the S&P has dropped an average of roughly 20% in the 250 days following the first rate cut, according to Wells Fargo Investment Institute.

That’s because it matters why the Fed is cutting rates. If it’s doing so simply because inflation has slowed enough to cut rates, that could be good for stocks. But if it cuts because the economy is spinning toward a recession, that’s different.

Earnings this week will have: yesterday - CCL higher and POOL lower; today – FDX higher and GIS lower; tonight - MU and PAYX; Thursday – Dow component NKE and WBA.

Economic reports will see: today – June Consumer Confidence rose to 100.4; today – May new home sales fell by 11.3%, the lowest since last fall; Thursday – weekly jobless claims, May durable goods orders, latest look at 1Q G.D.P.; Friday – May P.C.E., final U. of Michigan Consumer Sentiment Survey.

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