The Fuse
Stock futures are down modestly this morning as traders are in a risk off mode early. That can change drastically by days end of course, as we’ve seen happen the last couple weeks. The two-day fed meeting starts this morning and ends with a decision on rates then a press conference tomorro..
Interest Rates are on the move and heading lower in a risk off trade this morning. Long bonds are higher as traders await some inflation data and the new policy decision from the Fed. Bonds have been smacked around lately as long term yields rise up, but perhaps some short covering here ahead of the news.
Oil prices are down slightly as is gold, stocks in Asia climbed modestly but the Hang Seng and Shanghai dropped sharply, 1.1% and .8% respectively. In Europe the STOXX was barely changed. Volatility is on the rise this morning as the VIX rises about 1%. It seems the market is on hold until the Fed meeting and inflation numbers pass.
Earnings last night from Calavo were positive, the stock up nearly 10% this morning. Academy Sports will be out later today along with big software/data name Oracle, Casey’s and the first report from recent IPO Rubrik.
All the hoot n’ hollarin’ about Apple’s big event went for a yawn. History though tells us the stock makes its move after the conference is over, that was certainly the case for the past four years. Today we’ll have Oracle’s earnings later tonight and that event might move markets, the CPI for May is released tomorrow morning.
The market action Monday started with a defensive tone. Yields started to rise and with that a drop in the small cap IWM, which tends to move opposite of rates. But that drop early was rehabilitated as buyers stepped in to add on the dip, something we have seen happen lately. Those dip buyers were rewarded when adding positions at a timely moment. News later this week with the Fed meeting might spur a bit more volatility.
Though markets did rally from their lows of the session the turnover was rank. Perhaps traders are waiting to see a bit more volatility into the Fed decision and press conference of the inflation report due out earlier that day (Wednesday). Whatever the case, we are into summer trading and with that only a few heavy volume days will happen during the week.
SPX 500 and Nasdaq held good support today early in the session, both indices closed at new all time records. The IWM (small caps) were down sharply near the open but did rally back for a modest gain, that late surge on some good turnover. If the indices above make more new highs we’ll have to wait on some better short term support levels.
The Internals
What’s it mean?
A better day for the internals as the struggle for direction is starting to be resolved. Bulls took control not long after the start of the session and finished up near highs of the day. That’s important but with a lack of volume there is not as much conviction. Regardless, price action was good
the internals showed nice strength. The VOLD improved and so did the ADD, VIX fell after rising up early, put/calls remain down while the ticks on NYSE were divided. Today might give us a better picture of the next move in markets.
The Dynamite
Earnings this week:
- Tuesday:ASO, ORCL, CASY, RBRK
- Wednesday:VRA, AVGO, PLAY
- Thursday:SIG, ADBE, RH
- Friday:N/A
Economic Data:
- Tuesday:Small Biz Optimism survey
- Wednesday:CPI for May, Fed meeting Ends, Press Conference
- Thursday:Jobless Claims, PPI
- Friday:Consumer Sentiment, Import/Export prices
Fed Watch:
It’s a big week for the Federal Reserve, which has another big meeting coming up. This two day meeting will likely result in no action on the fed funds rate, but a new set of projections will be released. Inflation remains sticky and a problem to the committee, if they see more challenges ahead they will simply reiterate ‘higher for longer’ until conditions improve.
Stocks to Watch
Apple – Their annual Worldwide Developers Conference (WWDC) is this week and many believe they will spend a generous amount of time and capital on AI functions. Many consumers are waiting on new iPhones in order to move on the new releases, which could come as soon as 2025. This conference is one that could start a gamechange for Apple.
NVIDIA – After reaching new heights last week, the most valuable company in the world, NVIDIA’s stock will split 10-1 this week.
It’ll be interesting how it trades, will more sellers show up cutting their positions? Probably so, but the stock won’t move nearly as much.
Inflation – CPI and PPI readings will be out later this week. These will be the two main economic data reports delivered. All eyes on the CPI as economists expect very little change in May (1.7% annualize for the month/month).
