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Playing hide and seek

Posted June 17, 2024 at 9:30 am
Patrick J. O’Hare

Everything still seems to be coming up roses for the mega-cap stocks (most of them anyway), which is why the S&P 500 and Nasdaq Composite have seen a blooming of new record highs.

The equal-weighted S&P 500 is down 1.3% for the month and up 3.7% for the year while the Russell 2000 is down 3.1% for the month and down 1.0% for the year.

The market doesn’t appear ready to stop this game of hide (broader market) and seek (mega-cap stocks) just yet. Currently, the S&P 500 futures are down five points and are trading roughly in-line with fair value; the Nasdaq 100 futures are up nine points and are trading 0.1% above fair value; and the Dow Jones Industrial Average futures are down 90 points and are trading 0.3% below fair value.

NVIDIA (NVDA) is up 1.2% in pre-market trading and Apple (AAPL) is up 0.6%, so it is evident why the Nasdaq 100 futures are propped up a little bit more in what has been a relatively quiet morning.

There aren’t any big headlines on the corporate side to energize the market. Steel Dynamics (STLD) issued a second quarter earnings warning, Starboard Value has taken a $500 million stake in Autodesk (ADSK), according to The Wall Street Journal, and Tesla (TSLA), according to Electrek, halted deliveries of its Cybertruck due to a wiper problem.

Most of the attention is focused on macro developments, but one might still say it is undivided attention. There is a market holiday on Wednesday (Juneteenth), which is an excuse for many participants to turn it into an extended vacation weekend.

Not that participants need a holiday this time of year to start a vacation. Just about any week between Memorial Day and Labor Day calls out as a potential vacation week that can detract from trading volume.

In any case, this could be one of those weeks, particularly if there aren’t any surprises emanating from an economic calendar that includes the May Retail Sales, Industrial Production, Housing Starts, and Existing Home Sales reports throughout the week.

Over the weekend, China reported a mixed bag of economic data that included industrial production (weaker than expected), retail sales (stronger than expected), and fixed asset investment (about as expected) for May.

Separately, Minneapolis Fed President Kashkari (non-FOMC voter) said in an interview that a December rate cut by the Fed is a “reasonable prediction.” What happens with the data over the course of this summer will help determine how reasonable that prediction is.

Originally Posted June 17, 2024 – Playing hide and seek

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