Daily Market Notes | 5-minute read

May 28, 2024

By Donald Selkin | Chief Market Strategist

DOW: 38,918

S&P: 5311.5

Nasdaq: 17,022.21

10YR T-Note: 4.51%

Bitcoin: 68075

VIX: 12.65

Gold: $2360.1

Crude Oil: $79.7

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.

After Thursday’s downside disaster, the market was able to bounce back from its worst showing this month and end with gains on Friday.

In the process, the S&P advanced 37 points to 5304 and won back all its losses from the prior two days and was able to eke out a small gain for the week, which extended its positive streak to five in a row. It now sits just below its record all time high from last Tuesday and was led by a new high in NVDA after its blowout earnings report.

The Dow sort of faded into the close and rose with a modest gain of 4 up to 39,069 as declines in CRM, JNJ and UNH prevented further advances from the likes of AAPL, GS, JPM and MSFT.

The Nasdaq did the best of all with a 184 point advance up to 16,920 and this is the kind of leadership one would like to see with MSFT, AAPL and NVDA, the three largest ones of all leading the way.

The Russell 2000 Index of small stocks followed along with a 21 point advance up to 2068 while the VIX for some strange reason also rose, up to 12.36 as it bounces around at the low end of its recent trading range.

DECK jumped 14% for the biggest gain in the S&P 500, stronger profit and revenue for the latest quarter than expected. The company behind the Hoka, Ugg and Teva brands also gave a forecast for revenue this upcoming fiscal year that was in line with analysts’ expectations.

ROST also lifted the market after leaping 8%. The retailer reported better profit for the latest quarter than analysts expected. That was despite its revenue only edging past expectations, as customers continue to hold back on purchases of non-essentials.

Its C.E.O. said several challenges, “including prolonged inflation, continue to squeeze our low-to-moderate income customers’ purchasing power.”

Even though data on the overall economy has been showing continued strength for spending by U.S. households, the numbers underneath the surface may not be as encouraging. WMT and TGT are saying that high income consumers are doing fine, but beginning to trade down while the lower income consumer is struggling. Macro often focuses too much on the average and the average is skewed by the high-end household.

The market got a bit of a boost Friday from a report showing overall sentiment among U.S. consumers weakened by less in May than preliminary data had suggested. Perhaps more importantly, the report from the University of Michigan also said U.S. consumers’ expectations for inflation in the coming year rose by less in May than earlier feared.

That could help stave off a vicious cycle where high expectations for inflation among U.S. households drive them to behave in ways that only make inflation worse.

Worries about stubbornly high inflation were behind this week’s rocky trading, after indexes set records recently. The weakness began after the Federal Reserve on Wednesday released the minutes from its last policy meeting which showed some officials talking about the possibility of raising rates if inflation worsens.

Stocks fell further after reports on Thursday such as weekly jobless claims, April new home sales and the Global PMI report indicated that the U.S. economy is stronger than expected. It was the old “good news is bad news” syndrome at work.

That in turn could at least delay the Federal Reserve from giving relief to financial markets through cuts to its main interest rate, which is sitting at the highest level in more than 20 years. The Fed is trying to pull off the difficult feat of slowing the economy enough through high interest rates to stifle high inflation but not so much that it kneecaps the job market.

Treasury yields climbed this week on such concerns, but they were mostly stable Friday following the report on consumer sentiment. The yield on the 10-year Treasury slipped to 4.46% from 4.48% late Thursday. The two-year yield, which more closely tracks expectations for action by the Fed, was holding steady at 4.94%.

Last week’s bumpiness for stocks came despite another blowout profit report from NVDA, which has rocketed to become one of the most influential stocks amid a frenzy around artificial-intelligence technology. Fervor around AI had pushed some stocks to heights that critics called overdone, but this one’s tremendous profit growth and forecasts for more suggest it could keep going.

On the opposite end, WDAY fell 15% despite reporting stronger profit for the latest quarter than analysts expected. The company, which helps businesses manage their people and money, gave a forecast for upcoming subscription revenue that fell a bit short of estimates.

Earnings this week will include: Wednesday – Dow component CRM plus DKS, OKTA, HP, CHWY; Thursday – BBY, COST, DELL, DG, KS, MRVL, NTAP, ZS. Economic reports will see: today – May Consumer Confidence came in higher at 102; Thursday – weekly jobless claims, second estimate of 1Q G.D.P,; Friday – April personal income and spending and April P.C.E. which is important to the Fed.

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