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July 26, 2024
DOW: 40,499.68
S&P: 5,442.27
Nasdaq: 18,943.72
10YR T-Note: 4.22%
Bitcoin: 67,226.80
VIX: 17.51
Gold: $2380.95
Crude Oil: $77.42
Prices Current as of 9:30 am
Source: CNBC
Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.
In what was an astoundingly volatile but ultimately disappointing day yesterday, all of the various stock market indices shot up to huge gains by 10 am and then went on their own way to consolidate what has been the recent pattern, namely the smaller stocks once again doing better than their larger counterparts.
For instance, the Dow reached a large gain of 584 points, the S&P was ahead by 64 and the Nasdaq gained 195 after being lower by 300 at 10:15 am.
But unfortunately, from those levels, things started to come down and actually had the nerve to end lower for the S&P and Nasdaq while the Dow and Russell 2000 Index of small stocks ended higher.
So, the final score was that the Dow finished with a closing gain of 81 to 39,935 led by CAT, CRM, GS, and IBM on earnings.
The Russell 2000 Index of small stocks finished 27 points higher at 2223 after being ahead by 47 while the S&P actually had the nerve to end down with a late collapse by 28 to 5399 would you believe it?
And the Nasdaq, the favorite whipping boy recently, turned that gain of 160 into a closing decline of 160 to 17,183 and how do you like that as the larger former technology leaders just gave up small gains into closes at the close.
Economic reports were decent with the first estimate of 2Q GDP coming in better at 2.8% and the price component was a little lower. Weekly jobless claims slipped to 235,000.
Highlighted stocks that did better included Dow component IBM plus ABBV, HAS and RTX while that awful F got blasted to the downside, in addition to Dow component HON plus CMG, AZN, NFS and RCL.
Bond yields did not move too much as the market is now anticipating rate cuts definitely starting in September and now the thinking is that there will be three of them based on a slight weakening in the economy and better inflation readings.
After getting trounced by their larger rivals for years, some of the smallest stocks have shown much more life recently. Hopes for coming cuts to interest rates have pushed investors to look at smaller stocks through a different lens.
Smaller companies, which often carry heavy debt burdens, can feel more relief from lower borrowing costs than huge multinationals. Plus, critics have said the big tech stocks that had been carrying the market for years were looking expensive after their meteoric rises.
The small stocks in the Russell 2000 index leaped a stunning 11.5% over five days, beginning on July 11. The surge looked even more eye-popping when compared with the tepid gain of 1.6% for the big stocks in the S&P over the same span. Investors pumped $9.9 billion into funds focused on small U.S. stocks last week, the largest amount since 2007, according to a recent report.
They were all encouraging signals to analysts, who say a market with many stocks rising is healthier than one dependent on just a handful of stars.
Hope for a broadening out of the market has sprung up periodically, including late last year. Each time, it ended up fizzling, and Big Tech resumed its dominance.
Of course, this time looks different in some ways. Some of the boost for small stocks may have come from rising expectations for a Republican sweep in November’s elections, following President Joe Biden’s disastrous debate performance last month. That pushed up U.S. stocks seen as benefiting from a White House that could be hostile to international trade, among other things.
Traders are also thinking cuts to interest rates are much more imminent than before, with expectations recently running at 95% confidence that the Fed will make a move as soon as September, according to data from CME Group.
But some professional investors still aren’t fully convinced yet as 60% of the companies in the small-cap index struggle with profitability, in part because private-equity firms have already taken many money-making ones out of the stock market. Smaller stocks also tend to be more dependent on spending by consumers than larger companies, and consumers at the lower end of the income spectrum are already showing the strain of still-high prices.
Cuts to interest rates do look more likely after Federal Reserve officials talked about the danger of keeping rates too high for too long. But the Fed may not pull rates down as quickly or as deeply as investors suspect. Small stocks, which have struggled through five quarters of shrinking earnings due to higher rates, also are less likely to get a boost in profits delivered by the artificial intelligence wave.
Today’s PCE report came in kind of neutral with a gain of 2.5% year over year and the core rate of 0.2% monthly and 2.6% year over year. The stock index futures are higher and hopefully we see resistance for a change.
