Daily Market Notes | 5-minute read

May 30, 2024

By Donald Selkin | Chief Market Strategist

DOW: 38,055.10

S&P: 5,241.69

Nasdaq: 16,809.18

10YR T-Note: 4.56%

Bitcoin: 68,266.90

VIX: 14.09

Gold: $2355.00

Crude Oil: $78.71

Prices Current as of 11:00 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 could not get over the negative effects of higher interest rates on Wednesday and ended sharply lower with a very late selloff adding to the downside pressure.

As a result, the Dow finished 411 points lower to 38,441 led by huge declines in CAT, MCD and UNH.

The S&P could not withstand the pressure, as it traded sharply lower all day and then was hit again in the last 30 minutes to finish 39 points down to 5266 as the going seems to be getting tougher at the higher prices lately. Not even a gain to a new all-time high from supercharged NVDA, in addition to another gain in NFLX, could stop the downside carnage with 80% of its members negative. The index trimmed its gain for May, which had been on track to be its best month since last November.

The Nasdaq also took it on the chin with a 99 point downside beating to 16,920 despite the efforts of the two mentioned above and fell after three straight record highs. The Russell 2000 Index of small stocks had another poor day with an additional 30 point loss to 2036 while the VIX loved the downside action and gained up to 14.28.

AAL led a slump for airline stocks after cutting its forecast for profit and other financial targets for the spring. The carrier said fuel costs may be a bit lower than previously thought, but an important revenue trend would likely be as well and its shares fell by 13%.

COP fell 3% after it said it would buy MRO in an all-stock deal valuing the company at $22.5 billion, including $5.4 billion of net debt. It is the latest big deal for an industry that has seen several buyout announcements recently and its stock gained 8%.

AAP sank 11% after its results and revenue for the latest quarter came up just shy of analysts’ expectations. The retailer said the industry has had a slower start to the year than expected.

Another climb in longer-term Treasury yields weighed on the stock market, and the 10-year yield rose to 4.61% from 4.54% late Tuesday following an auction of $44 billion in seven-year Treasurys. Worries have been rising that weak demand from buyers for Treasurys in such auctions will help drive yields higher.

The 10-year yield is still down for the month, but it has been creeping higher since dropping below 4.40% in the middle of May. This month’s swings in yields have also come as traders recalibrate their expectations for when the Federal Reserve might begin cutting its main interest rate, which is at its highest level in more than two decades.

The Fed Beige Book report said that it has heard from businesses and other contacts around the country that consumers are pushing back against more increases to prices. That in turn is eating into companies’ profits as their own costs for insurance and other expenses continue to rise.

U.S. stocks have set records despite worries about interest rates staying high in part because stocks related to artificial-intelligence technology keep rising. NVDA’s latest blowout profit report helped drive the frenzy even higher. After briefly dipping in morning trading, it rose another 0.8% for its most modest gain since its profit report.

DKS jumped 16% after topping analysts’ expectations for profit and revenue in the latest quarter. The retailer also raised its forecast for profit over the full year. CHWY, an online seller of pet supplies, likewise reported stronger profit for the latest quarter than expected, and its stock jumped 27%. The company plans to return up to $500 million to its shareholders by buying back its own stock.

Stocks in Shanghai were roughly flat after the International Monetary Fund raised its forecast for China’s economic outlook, saying it expects the No. 2 economy to grow at a 5% annual pace this year. But it also warned that consumer-friendly reforms are needed to sustain strong, high-quality growth.

Earnings this week will include: yesterday – ANF, CHWY, DKS, CAVA higher and AAL lower; today - Dow component CRM plus A, KS, HRL, NOW lower while OKTA, BBY, FL, HPE are higher; tonight - COST, DELL, MRVL, NTAP, ZS.

Economic reports will see: yesterday – Fed Beige Book (see above); today - weekly jobless claims were 219K, second estimate of 1Q G.D.P slipped to 1.3%, April pending homes sales off by 7.7%; Friday – April personal income and spending and April P.C.E. which is important to the Fed.

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