The Fuse
Stock futures continue to rally this morning after a powerful gain on Monday. Followthrough is always key but there is some danger that buyers have run out of ammunition. Volatility is up slightly but well off higher levels, keep an eye here to see where the daily trend is at.
Interest Rates are steady across the board this morning as the next to last Fed meeting of 2025 gets underway. The committee appears ready to cut rates one more time, easing conditions for consumers and businesses alike. We’ll see how the bond market responds. So far the 2 yr yield is steady, the long bond as well, junk spreads are very tight, indicating the economy remains robust.
Stocks are higher again this am, but declines in Europe are not helping. The STOXX down .3% led by losses in Germany and France, but FTSE added .1%. Gold is down sharply and broke 4K today, silver also down and crude is sliding. The US dollar index fell .1%. Stocks in Asia were lower, Japan off by .6%, Hong Kong down .3% and Shanghai off .2%. German 10 yr bund yields fell 1bp.
Earnings last night from Celestica were nothing short of spectacular, the stock up 10% or more. NXPI just ho-hum, this morning strong reports from SOFI, Paypal and UPS along with Corning. Also strong revs and guidance from Wayfair, disappointment from DR Horton and Royal Caribbean. Tonight we hear from Visa, Seagate, Booking Holdings, Cheesecake Factory and Bloom Energy.
Terrific action Monday as we saw some very responsive buying. Stocks were flying higher on the open after some positive trade news between the US and China. Solid statistics across the board for the bulls, which hit new all-time highs on all the indices. Next up, big earnings and the Fed meeting.
What you like to see when markets hit new highs is very strong breadth, and that was the case yesterday. A demonstrative move by the bulls, a significant situation if the markets are going to continue higher. Oscillators remain in positive territory, new highs trounced new lows and just crushed but bears’ spirit.
Good volume yesterday but that was somewhat expected, as the indices just gapped higher on big turnover and never looked back. Could the volume have been better? Sure, but remember the market is still climbing a wall of worry, which by definition means higher levels on moderate volume (not lights out yet).
We continue to wait for the support levels to be tested but no question this powerful rally continues to move on. The bears have been waiting for some sort of sign that markets were going to fail, not even a potential ‘ball drop’ in trade can change the bulls’ mind about going higher. 7K coming on the SPX 500 very soon.
The Internals
What’s it mean?
Very solid internals yesterday with the VOLD finishing at highs of the session, the ADD was challenged however, as was ADSPD. VIX was pounded down again, below 16% as that makes us nervous before the Fed meeting begins. Ticks were super green all day, a slew of buy programs all day long, put/calls were lower which is bullish.
The Dynamite
Economic Data:
- Monday:Durable Goods
- Tuesday:home price index, consumer confidence
- Wednesday:trade balance, inventories, pending home sales, FOMC rate decision
- Thursday:jobless claims, GDP, Bowman speaks
- Friday:PCE, income/spending, employment cost, fed speak
Earnings this week:
- Monday:WM, KDP, SIFY, CDNS, WHR, CR, CLS, RMBS,CAR, BBBY
- Tuesday:SOFI, UNH, UPS, GLOW HSBC, JBLUE, DHI, RCL, W, ENPH, BE, OKE, BKNG, STX, V, ERTS, CAKE
- Wednesday:VZ, BA, CVS, CAT, FI, CNE, ETSY, FHC, ADP, PSX, META, MSFT, GOOGL, CMG, CVNA, NOW, SFM, MELI, SBUX
- Thursday:LLY, MRK,, CMCSA, OWL, RBLX, BAX, AAP, AMZN, AAPL, COIN, RDDT, MSTR, WDC, RKT, IOT, NET, ROKU
- Friday:CVX, XOM, ABBV, LYB, CHTR, CBOE, NINE, LIN
It’s a huge week for the Fed with some fed speakers later in the week, but the spotlight is on the committee and Chair Powell. The FOMC is expected to cut rates one more time at this week’s meeting, bringing the funds rate down to 3.75%. That is a path the committee talked about at the last meeting with their projections indicating this to be the action. How many more cuts is now the question, Chair Powell may address that in the press conference.
Stocks to Watch
Gold – The yellow metal remains quite volatile and we’ll be looking for gold to make more big moves this week. Gold volatility is extremely high and causing the severe moves up and down, silver as well.
Apple – Always have one eye on the big Apple as they report earnings this coming week. How is the iPhone 17 doing so far, will they run out of product? How about services and other items to drive margins? The anticipation and expectations are high, the stock may fade if there is not enough left into the future for investors.
Google and Meta – We are focusing on these two names here as they are both reporting on Wednesday. Google hit a new high Friday while Meta is still floundering, I expect to see both move sharply following their earnings release.
