Yes, that was a down day yesterday that saw each of the major indices lose at least 1.0%. The losses were paced by tech stocks and mega-cap stocks.
On the surprise meter of 1-10, that should register about 1. It should have been virtually no surprise that those stocks would be subjected to some selling interest after the run they have had.
This morning, however, there is some buy-the-dip action that is helping them and the equity futures market rebound. On the surprise meter of 1-10, that should register about 1. It’s little surprise that there would be a buy-the-dip bid, because market participants are aware that the buy-the-dip trade has proven successful many times over since the lows last October. Accordingly, they will play it until they are surprised by it not working.
A much better-than-expected earnings report and outlook from CrowdStrike (CRWD), which is up 22% in pre-market trading, has energized the buy-the-dip approach in the growth stock/tech stock space.
Currently, the S&P 500 futures are up 31 points and are trading 0.6% above fair value, the Nasdaq 100 futures are up 165 points and are trading 1.0% above fair value, and the Dow Jones Industrial Average futures are up 184 points and are trading 0.5% above fair value.
The mega-cap stocks are flexing some pre-market muscle too. Apple (AAPL) for its part is up 0.8%; and NVIDIA (NVDA), well, NVIDIA is up 1.8%.
This rebound-minded action is happening in front of Fed Chair Powell’s semiannual monetary policy testimony before the House Financial Services Committee at 10:00 a.m. ET.
The prevailing expectation is that Mr. Powell will reiterate that there has been a lot of progress in bringing inflation down, but that the Fed desires to see more data to be more confident that inflation is moving back on a sustainable track to its 2.0% target before cutting rates.
The prepared remarks released a short time ago had the same hues as his policy-minded remarks did following the January 30-31 FOMC meeting.
The 2-yr note yield is unchanged today at 4.55%, and the 10-yr note yield is also unchanged at 4.14%, sitting quietly before the Fed Chair’s testimony and in the wake of an ADP Employment Change Report for February that was soft, but not unduly squishy.
Private-sector payrolls increased by 140,000 in February (Briefing.com consensus 150,000) following an upwardly revised 111,000 (from 107,000) in January. Interestingly, a 5.1% pay gain for job-stayers was the smallest since August 2021, yet the 7.6% increase for job-changers was up from January and the first increase since November 2022.
The pay increases, though, are still outpacing inflation, which is a helpful construct for overall consumer spending activity.
Still, as Ross Stores (ROST) pointed out in conjunction with its better-than-expected earnings report, elevated housing, food, and gasoline prices continue to pressure low-to-moderate income customers’ discretionary spend.
In other news, it is being reported that Nikki Haley will end her campaign for president with an announcement at 10:00 a.m. ET today after the Super Tuesday primaries made it clear that former President Trump will be the presumptive GOP nominee for president. On the surprise meter of 1-10, that should register about 1 at this point.
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Originally Posted March 6, 2024 – No real shocks on the surprise meter
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