Wall St rallies; Nasdaq hits 40-yr milestone, Apple scales $3 trillion

Apple hit the $3T mark, the Nasdaq finished the first half with a 31% gain, its best performance in 40 years, and the PCE index came in at 3.8% vs 4.3%.  What’s not to celebrate as the indexes steadily zoomed up all day, the Dow up 285 points. Even the skeptics who don’t believe that the Fed’s war against inflation will not end in recession today admitted, “but the chances are going up.” On this the last day of Q2, the S&P is up 8.3% for quarter, the Nasdaq 12.8%, the Dow 3.4%.  (Graph below.) 

Dow, S&P gain with bank rally countering rate worries

A slew of strong economic data again stoked fears of more rate hikes which sent the Nasdaq on a rollercoaster between red and black (though it closed at break-even) but boosted value stocks and cyclicals shooting the Dow up 269 points. Among the good reports was a decline in new unemployment benefits and a big boost in Q1 GDP growth from 1.3% to 2.0%.  The odds of a ¼ point hike in July are now raised to 86.8%, the Nasdaq is on track for a 29% gain for first half, the biggest in 40 years, and PCE due tomorrow is expected to remain at 4.7%. Volume remains well below average at 9.6 billion. 

Nasdaq edges up, S&P 500, Dow decline slightly; more Fed rate hikes in focus

The Nasdaq did okay but the Dow and S&P spent the morning deeply in the red, the Dow to the tune of 175 points. Then very briefly at noon, the market zoomed way up, the S&P and Dow reaching near break-even, then just as suddenly plunged again for the rest of the day to close down. The a.m. boom was likely the result of strong tech performance, with Apple reaching an all-time high, and strength in the Russell placating concerns that the market was becoming top-heavy. 

Wall Street closes higher as upbeat economic data allays slowdown fears

It was a shot straight up on all three indexes as the first econ reports expected this week came with nothing but good news, further confirming that the economy remains in expansion with no threat of worsening inflation or impending recession and consumer confidence at a 1-1/2 year high. The Dow ended a 6-day losing streak and the Nasdaq is on path for its best first-half in 40 years. The odds of a ¼ point July hike are now 77% with more key data expected as the week progresses.  Volume remains below average at 10.16 billion. 

Wall Street slips as investors eye Russia, Fed hikes, quarter-end

With all the uncertainties going into the final week of Q2, investors didn’t know which way to place their bets so the Dow swung back and forth a few times between a hundred down and a hundred up before settling near break-even. Add to that the continuing tug of war over rate hikes and the recent unrest in Russia and tech saw some profit-taking sending both the S&P and Nasdaq into a sell off, the Nasdaq down 156 points. There is a slew of new data coming later this week so most of the market is on the sidelines which was reflected in the unusually light volume of just under 9.3 billion. 

Retirement Blind Spots

As Consuelo Mack mentions below on this week's WealthTrack program, there is no better time than the start of summer to be reviewing retirement objectives and strategies. I will personally be doing the same in the weeks ahead.  Enjoy your week.  

9 Best Cheap Stocks to Buy Under $10

To kick off the summer, here is the latest from U.S. News Invested of the best stocks to buy for investors who are on a budget.  

Wall Street ends down, snaps weekly winning streak on Fed worries

The market is resigned to another ¼ point hike in July but has remained adamantly in denial about the Fed warning about a second hike before year-end.  Today that denial appears to have been vanquished with two Fed presidents warning again that there would be two more hikes. The indexes were down from the outset indicating that sentiment had already changed at open but then everything went very much more south just after 2 pm which was probably when the Fed presidents made their remarks, generating the biggest losses since the March banking crisis. The further evidence of the change in sentiment was reflected in the rate-sensitive Nasdaq which suffered the biggest percentage loss of all the indexes.  

Wall Street ends higher as Powell wraps up testimony

There was lots of uncertainty on display in the market today as the Dow zigzagged back and forth several times between 50-point gains and hundred-point losses until finally closing near break-even.  The S&P fared slightly better and the Nasdaq much better due to gains from Amazon, Apple, and Microsoft.  The crux of the mixed messages lay with Powell’s final day remarks before the Congress as he continued to be hawkish insisting on more rate hikes to meet the inflation target. 

Wall Street extends sell-off as Powell hints at further rate hikes

Again, ahead of Powell’s congressional testimony today, all the indexes pulled back, the Dow down almost 200 points in the morning, before coming back to near break-even before diving again shortly after 2 p.m.  It is likely that at 2 p.m. Powell concluded his remarks that there would almost certainly be two more rate hikes before year-end, even though this was widely expected.  And yet the market remains skeptical and, as today’s expert put it, “There could be one more rate hike, but I don’t think anyone’s buying the fact that there will be two,” and thus “assuming that the Fed is very close to being done.”  The odds for a ¼ point hike in July are now at 74%.  Volume was below average at 10.6 billion. 

Stocks fall, U.S. dollar up ahead of Powell testimony

Awaiting Wednesday’s congressional testimony from Fed Chair Powell, all the indexes pulled back today, especially in the morning with the Dow down almost 400-points by 10 a.m. Then all recovered to almost break-even by close, the Dow being the exception losing 245 points.  If Powell indicates a continued firm stance that more rate hikes are coming, that could well stabilize the dollar after last week’s declines. Investors are also looking at China’s move today to cut its rates.  Volume was 11.3 billion. 

The 10 Most Valuable Companies in the World by Market Cap

To wrap us this holiday weekend, let's have a little fun. Let's have a look at the biggest, most wealthy companies in the world with a peek at just how big and how wealthy they really are.  Have a great week.  

AAII Investor Update: The Fed Pauses, Plus William O'Neil and the CAN SLIM Strategy

Below is the latest AAII Investor Update including their comments on this latest pause from the Fed this past Wednesday, as well as a tribute to William O'Neil who passed away last month at the age of 90.  For those of you who work for the government or in finance, enjoy your day off tomorrow for Juneteenth.  

Economic Crisis Warning

Are we heading for a period of economic upheaval that will last for decades?  That's the viewpoint of Richard Bookstaber, Chief Risk Officer of the Fabric platform, as expressed in a recent New York Times op-ed, and as this week's guest on WealthTrack.  His analysis of the future is quite a bit bleaker than most on Wall Street but is still well worth the listen.  Enjoy the weekend.   

S&P 500 ends lower as Microsoft recedes from record high

All three indexes were in the black most of the day, the Dow up almost 200 points in the morning, but then slipped into the red around 2 pm to all close down by as much as their gains, the Nasdaq considerably more so. It was likely around 2 pm when the Fed tried throwing cold water on the market’s enthusiasm that the Fed was overstating inflation woes and emphasizing again that there would likely be two more hikes this year. The consumer appears to agree with the Fed as inflation expectations dropped to more than a two-year low. The Nasdaq has now had 8 consecutive weekly gains, the longest streak in four years, and the S&P its fifth. Volume was huge at 17 billion but this was distorted by the expiration of stock options so we’ll wait until Tuesday for the real picture. 

S&P 500 leaps to highest close in 14 months; traders bet US rates near peak

So who knows better, Wall Street or the Fed?  Today all bets were on Wall Street as investors have chosen to believe that the Fed’s hawkishness is misplaced and that there will be no more of the predicted rate hikes this year.  This propelled the odds of a July hike down to 67% and, along with some very positive economic data today, propelled the indexes up big time, the Dow up 428 points. 

Stocks rise, dollar pares losses after Fed signals more hikes ahead

The long-expected rate pause became reality today but instead of generating the expected exuberance instead created a choppy and mixed market as investors struggled with the disappointment that it would not be followed by rate cuts but rather almost certainly a couple more hikes before year-end. All in all, the rate pause was good news for tech which rose modestly and, as goes tech usually the cyclical Dow goes opposite, and that’s what happened with the blue chips down 430 points at 2 pm.  

Wall Street rises as inflation keeps cooling

I haven’t mentioned this before but it’s been building for some time now. It’s been getting harder and harder to find a daily market summary to write this report. Since it’s been years since the Wall Street Journal has published its summaries (which I had used for decades), I’ve always used Reuters Market News as my source but they’ve been doing an increasingly better job of hiding these reports, such that sometimes it takes ½ an hour or more to find one.  Today was the worst yet.  I couldn’t find anything and finally, after more than an hour of searching, found this summary by the AP.  If I continue to be unable to find this information, I may be discontinuing this blog.  I’m only hoping that Trump’s arraignment today may have been an inciting factor that pushed all the other news off the page. 

S&P 500 and Nasdaq close at highest since April 2022

The fourth straight day of an up market and with the Dow zooming today another 189 points, the S&P has now recovered 21% from the October low, having some investors calling this the middle of a bull market and giving investors more confidence. The CPI is due tomorrow with the expectation of showing some continuing small cooling in inflation and odds for a rate pause come Wednesday now at 76%, up from 72 on Friday. Goldman-Sachs has today upped its year-end S&P forecast to 4,500 from 4,000 which is also bolstering confidence.  But this week’s events will carry a lot of weight so, awaiting those outcomes, volume remains below average at 10.2 billion. 

Thoughts On The Macro Themes

From Heritage Capital Research, some detailed analysis of the current state of the markets.  

10 of the Best Stocks to Buy for 2023

 The latest from U.S. News Invested, the best stocks for this year:  

S&P 500, Nasdaq hit fresh 2023 highs as Tesla rallies

It was a volatile session with not one but two rallies, not one but two crashes. The day opened up over 150 points on the Dow by 11 a.m. only to come crashing down some 200 points by noon and then zooming back up some 80 points into the black by 3:30 pm, then falling again in the final minutes to close up 43.  Despite the modest finishing numbers, the S&P is still 20% above its October low and all three indexes notched weekly gains, the Nasdaq and S&P multiple weeks.  But sentiment remains cautious and bearish awaiting next Tuesday’s inflation data and next Wednesday’s Fed action on rates, the odds for a pause hiked today to 72%.  Thus, volume remains well below average at 9.9 billion. 

Wall Street ends up amid record low volatility ahead of eventful week

Yesterday’s profit-taking was supplanted by today’s tech rally which shot all the indexes back up, the Dow up 168.  The VIX, which hit a three-year low yesterday, went even lower today to a fresh post-pandemic record. It was enough to hike the odds of a rate pause next week up to 73% from yesterday’s 69.  But the overall consensus remains as stated by today’s expert, “You’ve just got paralysis in investors,” as they remain on the sidelines waiting for next week’s news on inflation and subsequent Fed actions.  This was reflected in the continuing way below average volume of 10 billion. 

S&P 500, Nasdaq close lower as traders cash in on latest megacap rally

Yesterday may have been a day of correction but today turned into a day of outright profit-taking after the recent strong megacap rally ahead of more inflation and Fed news next week.  On the inflation front, consumer prices are expected to be down slightly to show inflation continues to ease if ever slowly. But today’s rate hikes from Canada has dampened optimism about a Fed rate pause next week and the odds for a pause in just one day have shrunk from 80% yesterday to 69% today.  The good news is that today’s VIX is the lowest in more than three years suggesting that investors are not that concerned.  Volume was about 11.9 billion. 

US stocks end up as Fed, CPI loom large next week

The indexes all had pretty modest, non-volatile sessions – except the Dow that dove some 160 points by 2 pm, then recovered by close to break-even.  Pretty much everyone’s standing on the sidelines awaiting next week’s CPI data and the Fed’s June meeting on rates.  The smart money still says there’s an 80% chance the hikes will be paused and the CPI will show inflation still cooling. As today’s expert put it, “Investors are gaining a little optimism.”  Per the CBOE, 10.7 billion shares were traded. 

S&P 500 ends lower as traders eye potential pause in rate hikes

To pause or not to pause? That is the question that’s been keeping investors on edge and what has been turning every negative report into a positive as it may mean inflation has come down enough for the Fed to pause rates. Today it was the ISM reporting the services sector barely growing at all in May and now pushing the odds of a June rate pause to 80%.  But after Friday’s exuberant performance, it was to be expected that some correction would happen today, which it did with all the indexes a little lower, the Dow down nearly 200.  Volume was below average at 9.7 billion. 

2023's 10 Best-Performing Stocks

As we approach the year's mid-point, here is the latest and greatest list of the best stocks for 2023.  

Trade With Conviction, Ray Rondeau

Sat 6-3-23

For those of you interested in the latest AAII webinar that was held last Wednesday, a YouTube link is provided below.  

Wall Street ends up on jobs data, debt default averted

There was nothing but good news today which resulted in a massive 701-point hike in the Dow. Not only did the debt limit bill pass in the Senate bringing the VIX to an 18-month low, but the really good news was the increase in jobs coupled with an increase in unemployment.  That translates to slower wage growth which bolsters the case for inflation relief and the increasing odds of a rate pause, today up to 71.3%.  However, there is a naysayer in the crowd whose position that those believing that inflation is coming down and therefore the Fed will pause and even cut rates are just dead wrong.  Volume was close to the 4-week average at just a hair past 11 billion. 

Wall Street rises on hopes of Fed pausing hikes, debt ceiling deal cheer

A smaller than expected increase in wages spurred more hopes for a rate hike pause in June and shot the three indexes right up, the Dow closing at a +153.  With wage inflation slowing to 4.3% from the expected 6.3, the odds are now at 76.2% that the Fed will pause.  The debt bill passed Wednesday night by overwhelming bipartisan margins and is now in the Senate which we’re told will not take a break until they pass the bill.  The consensus is still for recession in the coming quarters but that it will be a soft landing.