Daily Market Notes | 5-minute read

May 14, 2024

By Donald Selkin | Chief Market Strategist

DOW: 39,427

S&P: 5223

Nasdaq: 16,433

10YR T-Note: 4.48%

Bitcoin: 61760

VIX: 13.56

Gold: $2356.7

Crude Oil: $78.14

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.

I had pointed out during the Monday morning meeting that it was unusual to see the various stock index futures higher and the pre-opening on the VIX higher as well, but on the other hand, the VIX close on Friday at 12.55 was getting it close to support levels in any event.

So sure enough, after a 136 point higher start for the Dow, it went negative at 12noon and just drifted lower for the remainder of the session to end with a closing decline of 81 down to 39,431 which also ended its eight day winning streak. It was hurt by selling in AXP, HD ahead of its earnings this morning and MCD.

The S&P also started out higher with a 15 point advance but also faltered late in the day with a final nominal closing decline of 1 point to 5221. It was helped by a nice gain in AAPL and NVDA which are its second and third largest components while MSFT, the largest, ended nominally lower. It still remains around 0.6% from its record high from the end of March.

The Nasdaq did the best of all with a closing advance of 47 up to 16,388 led by the two prior gains mentioned above plus a rare decent showing from TSLA.

The Russell 2000 Index of small stocks eked out a nominal advance of 2 up to 2062 while the VIX ended higher at 13.6 which pushes it further away from its ultimate downside support.

Biopharmaceutical company INCY jumped 9% after saying it would buy back up to $2 billion of its stock. It is the latest big company to say it’s returning cash to shareholders through such purchases, which boost the amount of earnings that each remaining share is entitled to.

And here we go again after a three year hiatus with GME jumping by 74% in a version of its crazy upside moves from that time when hordes of smaller pocketed investors sent the price way above what many professional investors considered rational.

One believer in particular, nicknamed Roaring Kitty, helped lead that charge, and a post on a social media account linked to him stirred more adrenaline. Within the first 70 minutes of trading, the shares were temporarily halted nine times because its price was swinging so sharply.

And fellow meme-stock AMC, which fundamentally has very little going for it, also rose by a large amount on a ridiculous 400 million shares traded.

On the losing end was FTRE, a provider of clinical trial management and other services for the life sciences industry. It fell 15% after reporting weaker results for the first three months of the year than analysts expected. It also gave a forecast for revenue over the full year that was below analysts’ expectations.

Stocks have broadly rallied this month following a rough April on revived hopes that inflation may ease enough to perhaps convince the Federal Reserve to cut its main interest rate later this year. A key test for those hopes will arrive tomorrow when the April C.P.I. report is released at 8:30am and this came in higher than expectations which follows the recent pattern.

Hopes have climbed that the economy can avoid “stagflation” and hit the bull’s eye where it cools enough to get inflation under control but stays sturdy enough to avoid a bad recession. Federal Reserve Chair Jerome Powell also gave financial markets comfort when he recently said the Fed remains closer to cutting rates rather than to raising them, even if inflation has remained hotter than forecast so far this year.

Some critics say the Fed may have to delay rate cuts for longer than traders expect because of continued pressure on inflation. They say that the goal for inflation that the Fed seeks is a pipe dream.

In the meantime, a stream of stronger-than-expected reports on U.S. corporate profits has helped support the market. Companies in the S&P are on track to report growth of 5.4% for their earnings per share in the first three months of the year versus a year earlier, according to FactSet. That would be the best growth in nearly two years.

Worries have been rising about cracks in spending by consumers, which has been one of the bedrocks keeping the economy out of a recession. Lower income households appear to be under particularly heavy strain amid still-high inflation.

In the bond market, Treasury yields eased a bit. The yield on the 10-year Treasury slipped to 4.48% from 4.50% late Friday.

In stock markets abroad, Chinese indexes were mixed. The Biden administration is expected to announce this week that it will raise tariffs on electric vehicles, semiconductors, solar equipment, and medical supplies imported from China, according to people familiar with the plan. Tariffs on electric vehicles, in particular, could quadruple to 100%.

First-quarter earnings season is winding down with the following reporting this week: today – Dow component HD lower; Wednesday – Dow component CSCO; Thursday – Dow component WMT plus AMAT, DE, TTWO, UA.

Economic reports will be important with: today – April P.P.I. naturally came in higher than expectations with a gain of 0.5% in both the overall and core rates and this was due to gains in auto insurance and housing. Year over year the advances were 2.2%; Wednesday – April C.P.I., April retail sales; Thursday – weekly jobless claims, April housing starts, April industrial production and capacity utilization; Friday – April L.E.I.

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