Daily Market Notes | 5-minute read

June 3, 2024

By Donald Selkin | Chief Market Strategist

DOW: 38,441.42

S&P: 5271.32

Nasdaq: 16,802.21

10YR T-Note: 4.41%

Bitcoin: 67303

VIX: 13.47

Gold: $2362.8

Crude Oil: $74.19

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 market action on Friday had absolutely nothing to do with the closely-watched P.C.E. report that was released in the morning as after having been down in the S&P and Nasdaq, both came roaring back very late with 20 minutes to go in an astounding comeback from the day’s lows which were there in place for most of the session.

It would seem that end of the month gyrations was the main cause and once again, the huge action in daily SPY calls and puts always has an input in the final results on days like this. Let us remember that the report could be interpreted as friendly in the sense that it did not show inflation increasing which is always the danger out there.

As a result, the Dow ended with a very large gain of 575 up to 38, 686 led by huge advances in CRM, UNH, both of which had fallen earlier in the week, in addition to CVX, AMGN, JPM and MCD. It had been ahead by “only” 291 with 20 minutes to go and how does a rally of this nature ( 284 points) make any investing sense if it were not for huge maneuvering in SPY calls and end of month activity.

And take a look at the S&P, which was actually negative at 3:30pm and this turned into a closing advance of 42 to 5277 in such a short period of time, astounding. Same for the Nasdaq which was lower by 139 at that same time and this got down to a 2 point closing loss in the last 20 minutes to 16,735.

The Russell 2000 Index of small stocks put in its two cents, so to speak, with a very late rally of 13 to 2070 while the VIX loved this upside action and ended down to 12.92.

So as May came to a close, its action showed its sixth winning month out of the last seven, not a bad record which also puts it in an overbought condition according to some observers.

GPS, soared to one of the market’s biggest gains, 28%, after delivering stronger profit and revenue for the latest quarter than analysts expected. The parent company of Old Navy and Banana Republic reported growth across its brands, reversing earlier declines at most of them. The retailer also raised its forecasts for sales and profit for the economy remains uncertain.

Stocks broadly got a boost from easing Treasury yields in the bond market after the April P.C.E. came in roughly as expected. That left open the question if investors ever get a lowering of interest rates from the Fed.

The report showed a key measure of inflation remained at 2.7% last month, exactly as forecast. Some underlying trends also improved by a touch more than expected. That could bolster confidence at the Federal Reserve that inflation is sustainably heading toward its target of 2%, something it says it needs before it will cut its main interest rate.

The Fed has been keeping the federal funds rate at the highest level in more than 20 years in hopes of slowing the economy enough to stifle high inflation. But if it holds rates too high for too long, it could choke off the economy’s growth and cause a recession that throws workers out of their jobs and craters profits for companies.

Friday’s report from the U.S. government showed that growth in spending by consumers weakened by more than economists expected. Growth in incomes for Americans also slowed last month.

Such numbers show businesses need to prepare for an environment where consumers are not splurging like they were last year.

After the report, the yield on the 10-year Treasury fell to 4.50% from 4.55% late Thursday. It had topped 4.60% earlier in the week amid worries about tepid demand following some auctions for Treasurys, a move that had hurt stocks.

The two-year Treasury yield, which more closely tracks expectations for Fed action, slipped to 4.87% from 4.93% late Thursday.

Virtually no one expects the Federal Reserve to cut interest rates at its next meeting in a week and a half. But traders are betting on a nearly 85% probability that the Fed will cut at least once by the end of the year, according to data from CME Group.

Stocks in industries that tend to benefit the most from easier interest rates helped lead the market Friday. Real-estate stocks in the S&P jumped 1.9% as a group for one of the biggest gains among the 11 sectors that make up the index.

On the losing end were several tech stocks.

DELL tumbled 18% even though it matched analysts’ forecasts for profit in the latest quarter. Its stock had already soared 122% in 2024 ahead of the report, meaning expectations were very high.

MDB dropped 24% despite topping forecasts for profit and revenue. The database company for developers gave forecasts for profit in the current quarter and for this full year that fell short of analysts’ expectations.

Earnings this week include: Tuesday – CRWD; Wednesday – CPB, DLTR; Thursday – DOCU, SJM, MTN.

Economic reports will see: today – April construction spending, April ISM Manufacturing Index; Tuesday - April final durable goods orders, April factory orders; Thursday – weekly jobless claims, April trade deficit; Friday – the big one with May non farms payroll report for which the estimate is 180,000 compared to 175,000.

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