Daily Market Notes | 5-minute read

June 5, 2024

By Donald Selkin | Chief Market Strategist

DOW: 38,725.42

S&P: 5328.32

Nasdaq: 17,089.21

10YR T-Note: 4.30%

Bitcoin: 71684

VIX: 12.88

Gold: $2373.8

Crude Oil: $73.58

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.

This is getting to be habit-forming as for the third straight day, the major indices rallied from early afternoon lows to finish higher again, but continuing the recent pattern, breadth numbers were negative as it was mainly the strong traditional leaders that led the way higher.

For instance, the Dow turned a loss of 174 points at 1pm into a closing advance of 140 up to 38,711 led by gains in BA, HON and UNH which has been volatile on both higher and lower days.

The S&P turned a 26 point intraday decline into a final advance of 8 up to 5291 led by, oh, no – the big three, namely MSFT, AAPL and the one that begins with NV. Ditto for the Nasdaq, which was lower by 78 in the early afternoon and ended 28 higher with help from AMZN, COST and ADBE for a change.

The Russell 2000 Index of small stocks was the real loser with a 25 point decline down to 2034 due to weakness in banks, both large and small and the VIX did little with a slight move higher to 13.16.

The action was stronger in the bond market, where Treasury yields slid after Tuesday morning’s report showed U.S. employers were advertising fewer job openings at the end of April than economists expected, namely 8.06 million.

Investors actually want the job market and overall economy to slow. That could help get inflation under control and convince the Federal Reserve to cut interest rates, which would ease the pressure on financial markets. Traders upped their expectations for cuts to rates later this year following the report, according to data from the CME group.

The question is whether the slowdown for the economy overshoots and ends up in a recession. That would carry the downside of not only causing layoffs for workers across the country but also weakening profits for companies, which would drag stock prices lower.

Tuesday’s report said the JOLTS number of 8.08 million at the end of April dropped to the lowest level since 2021. The numbers suggest a return to a normal job market following years full of strange numbers caused by the COVID-19 pandemic.

But it also followed a report on Monday that showed U.S. manufacturing contracted in May for the 18th time in 19 months. Worries about a slowing economy have hit the price of crude oil in particular this week, raising the possibility of less growth in demand for fuel, as its price has dropped close to 5% in price this week and is roughly back to where it was four months ago. That sent oil-and-gas stocks to some of the market’s worst losses for a second straight day.

Other companies whose profits tend to rise and fall with the cycle of the economy also fell to sharp losses, including steel makers and mining companies.

The smaller companies in the Russell 2000 index, which tend to thrive most when the U.S. economy is at its best, fell 1.2% as mentioned above.

BBWI tumbled 13% for the worst loss in the S&P despite topping expectations for revenue and profit in the latest quarter. Analysts called its forecast for results in the current quarter underwhelming.

And how about GME which gave back some of its big gain from the day before, when euphoria broke out after a central character in the stock’s 2021 run returned to say he had built a stake in the video-game retailer, and as I said yesterday, these gains have to be considered specious as the stock has horrible fundamentals and it is sad that it has been maneuvered by this character.

In the bond market, the yield on the 10-year Treasury slid to 4.33% from 4.39% late Monday and 4.50% late Friday. It had been above 4.60% recently while the 2-year yield, which more closely tracks expectations for the Fed, fell to 4.77% from 4.81%.

In stock markets abroad, India’s Sensex dropped 5.7% a day after jumping 3.4% following the country’s elections and how do you like that as a trap?

Earnings this week include: yesterday – BBWI; today – CRWD, HPE, CPB, PVH higher and DLTR lower; Thursday – DOCU, SJM, MTN.

Economic reports will see: yesterday – April construction spending declined by 0.1%, April ISM Manufacturing Index slipped to 47.8, the 18th lower number in the last 19 months; today - April final durable goods orders gained 0.6% and ex- transportation were ahead by 0.4% , April factory orders rose 0.7%, April JOLTS job openings report came in below consensus at 8.06 million; today – April ISM Services Component reached 53.8 which was the highest in two years; Thursday – weekly jobless claims, April trade deficit; Friday – the big one with May non 180,000 compared to 175,000.

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