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Ready for July

Posted July 1, 2024 at 9:45 am
Patrick J. O’Hare

It is going to be a shortened week of trading. The stock market will close early at 1:00 p.m. ET on Wednesday and will be closed the entire day on Thursday in observance of Independence Day. Today is a regular day of trading, and it appears that market participants will be moving prices higher at the open.

Currently, the S&P 500 futures are up 11 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 48 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 51 points and are trading 0.1% above fair value.

The positive disposition can be attributed in part to new inflows arriving on the first trading day of a new month, but one can’t dismiss the possibility that there is a little seasonal speculation going on, too, as the first 15 days of July have been reported to be the best two-week period for the S&P 500 since 1928.

Aside from the latter anecdote, gains in some of the mega-cap stocks have provided a measure of support along with some M&A activity that has included Boeing (BA) acquiring Spirit Aerosystems (SPR) for $37.25 per share in an all-stock deal, and BlackRock (BLK) acquiring Preqin for $3.2 billion in cash.

After Friday’s close, the new wires were busy posting press releases from many banks announcing new capital return plans (dividend increases and/or share buybacks) after passing the Fed’s annual stress test.

That news was generally expected, yet it was still nice to see in print and in practice.

Elsewhere, Treasuries are on the defensive. The 2-yr note yield is up six basis points to 4.78% and the 10-yr note yield is up 11 basis points to 4.45%. China’s June Manufacturing PMI and Non-Manufacturing PMI data haven’t been the selling catalyst. They were relatively soft with the former checking in at 49.5 (remaining in contraction territory) and the latter decelerating to 50.5 from 51.1.

WTI crude prices are up 0.5% to $81.98/bbl. That could be a factor, but the leakage that began overnight likely has to do as well with some safe-haven unwinding after the first round of France’s snap election created an impression that the far-right National Rally party may ultimately fall short of winning an absolute majority in Parliament when the second round of voting is completed on July 7.

In any case, Treasury yields will be watched closely as a potential spoiler for stocks if they keep rising. 

There will be some economic data today that will influence today’s proceedings, namely the June ISM Manufacturing Index ( consensus 49.1%; prior 48.7%) that will be released at 10:00 a.m. ET along with the May Construction Spending Report ( consensus 0.1%; prior -0.1%).

Originally Posted July 1, 2024 – Ready for July

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