The Fuse
Futures this morning are mixed as the market awaits two big pieces of data: Producer prices for May and the latest Fed policy decision. Both have the ability to move markets.
Rates are modestly higher this morning across the curve. But it is fed funds futures that will be watched closely today, a 90% expectation by the markets that the Fed will take a pause on rate hikes today.
UNH and other HMO companies are taking a hit early on after the CFO from United Healthcare said costs would be up as seniors stepped up for some elective surgeries. AMD unveiled its new AI chip, production to being in the 4th quarter.
Not much on the earnings front today but Lennar will report tonight, tomorrow morning we’ll hear from Jabil and Kroger. Tesla is raising prices for its Y model, this stock has been on a roll for a month.
The Fed meeting and decision later today: Need we say any more? This could be a game changer for the markets and the economy if the committee starts to ‘loosen their ties’ a bit.
Nice bounce back in breadth Tuesday as the ‘meltup’ rally continues. Dip buyers were aggressive from the start of the day, bidding up stocks after the milder than expected CPI number was released.
Volume was solid today, let’s call it an accumulation day, one we haven’t seen for about nine sessions. Buyers were out in force all day long, strong ticks in the internals as well as bullish volume just overwhelmed bearish trends.
Tacking on more gains Tuesday, not a common feat after a strong Monday. Markets continue to rise up and take out resistance levels. Next up for the SPX 500 would be 4400 and the 4550.
The Internals
What’s it mean?
Pretty strong day, and we can see it in the internals. Notice the strength in the VOLD and ADSPD, much better than yesterday even though the gains Monday were better. Strong turnover as well, with a drop in volatility (VIX) and put/calls again. Very bullish qualities here.
The Dynamite
Economic Data:
- Wednesday: PPI, Weekly mortgage applications, Fed Statement
- Thursday: Jobless claims, Retail Sales, Empire State manufacturing, Business Inventories
- Friday: Consumer Sentiment
Earnings this week:
- Wednesday: ACB, LEN
- Thursday: JBO, KR, COGT, ADBE
- Friday: BHAT, BUFF, NATH, ONVO
Fed Watch:
It’s the most important Fed meeting this week since….the last one? Of course that is hyperbolic, but we should note as we move forward in time the discussion around the table during the Fed meetings will become more divided. Recent comments from Fed speakers tell us some are talking pause, while others see the need for more aggressive rate hike moves. We’ll learn more Wednesday and in the press conference with Chair Powell. In addition, the ECB will have a rate decision later in the week.
Stocks to Watch
VIX – Volatility has reached levels not seen since before the pandemic. Some say it is ‘too low’. However, it is simply an indicator that is reflecting the mood or temperature of the room.
Federal Reserve – A big meeting as mentioned above, with the strength recently in the stock market could a ‘sell the news’ follow the latest policy decision?
Inflation – Two reads on inflation this week and Retail sales. We’ll get a good view on how inflation is being worked through the system and if the Fed’s efforts of higher rates is actually paying off.