The Fuse
Equity futures are getting hammered this morning after a stunning drop in India’s markets spread like wildfire. Volatility remains the theme here, wild movements the last couple of sessions as big money managers prep for what could be a busy month.
Interest Rates fell slightly with the 30 yr yield hitting a 2 week low at 4.53%. Fed futures are starting to price in a cut in July ever so slightly, but September seems like the better bet. The JOLTS report today is likely to have some influence.
India stocks were hammered overnight as it appears President Modi may not have the majority he needs for a clean sweep in parliament.
Oil prices are weak again as crude is making a run back to $70 per barrel, gold is also lower by 1%. Economic data has been weak and is holding back stocks.
Eyes are on the ECB as they may decide to cut rates at their meeting this week.
Earnings out this morning from Bath and BodyWorks and they look good but their guidance is weaker than expected. Tonight we’ll hear from Crowdstrike, HPE, PVH, Stitch Fix and Verint.
It was another volatile day for stocks as the indices started upward at the beginning of the day. It seemed as if there would be nice followthrough from Friday’s big turnaround, but the buyers were exhausted by the first hour and sellers entered the building. They took stocks down about 42 handles lower but to some good support, then the bulls came charging back to put the Nasdaq and SPX in the win column.
Strong breadth at the start with solid action from the small caps but that tapered off as the day wore on. In the end we had marginally worse breadth. a distribution day. However, we have come to expect a ‘turnaround Tuesday’ on most occasions, and means we could see breadth improve. To be sure, after the end of last week buyers were nowhere to be found, but with a new month upon us money flows are often positive, we’ll see how it goes.
Turnover was slower yesterday than last Friday, which of course was end of month and the last day of trading for several equity options. However, some pretty heavy volume in the Industrials, which may spur more selling later in the week. There has been strong volume trends to start a new month, so we’ll see if that happens later in the week.
After staging a remarkable comeback from lows on Friday the indices really powered up end of day Monday but it was nowhere neart that action from last week. With support below at 5,200 on the SPX 500 we continue to see buyers step in at lower prices, these dip buyers are really pushing the envelope. 38K is strong support on the industrials, Nasdaq should see some support at 18.5K.
The Internals
What’s it mean?
Challenging day for the bulls even though the Nasdaq and SPX 500 finished in the green. Market volatility is kicing up, the VIX made a run at 14% and backed away, the ticks are what is noticeable here, heavy red which means that could carry over to some more selling today. VOLD was uninspiring while the ADD finished weak.
The Dynamite
Economic Data:
- Tuesday:JOLTS, factory orders
- Wednesday:ADP employment, SPX service PMI, ISM services, crude inv.
- Thursday:Challenger job cuts, jobless claims, productivity/unit labor costs
- Friday:May Employment report, consumer credit
Earnings this week:
- Tuesday:BBWI, DBI, CRWD, HPE, PVH
- Wednesday:CPB, UNFI, FIVE, LULU, VSCO
- Thursday:BIG, CIEN, SJM, DOCU, AVO
- Friday:JILL
Fed Watch:
Fedspeak will be silent this coming week as the committee prepares for it’s next meeting June 11/12. We do not expect a rate move then but a new set of projections will certainly tell us where they stand on inflation, GDP, employment and the funds rate. Last week had a mixture of policy ideas but when it comes right down to it, that is all simple noise.
Stocks to Watch
Data – Important releases this week from PMI to ISM to labor. We’ll be watching the manufacturing and production data closely, along with productivity and unit labor costs. This will tell us if growth was driven by inflation or production.
Employment – The May jobs report looms large. It’s possible to see a 4% rate on unemployment for the first time in years, and that will wake up the Fed. The expectation is about matching with April, but wages are expected to tick higher.
NVIDIA – The last week this stock trades above 1000 for some time, the stock will commence a 10-1 stock split in a week, perhaps garnering even more attention. For certain, the stock needs to cool down some but that might not come until after the split.
