(Justin Vaughn, Editor, Options Trading Report)
Another week of gains for the indices as the Nasdaq hit another weekly high, up 3.2% with the S&P 500 following, up 1.6%, both reaching records almost daily. The Dow Jones Industrial Average struggled for the third week in a row, again losing 0.5% for the week. With labor adding 272,000 jobs for May and inflation beginning to flatline, the Fed appears to be standing pat holding interest rates steady. “There’s some mixed data here and there, but this far into the cycle, we’re still at 4% unemployment, so that’s pretty healthy,” said Arum Bharath, chief investment officer at Bel Air Investment Advisors, who is still “bullish on stocks.” According to FactSet, analysts expect the S&P 500 second quarter earnings to rise 9%, giving many advisors and financial institutions reasons for readjusting expectations. Gold kicked up its heels, up 1.4% Friday. Oil has been quite steady, hovering in the $80 to $82 a barrel range after coming off a low of $74.00 a barrel two weeks ago.
The Nasdaq Composite and the S&P 500 continued higher on Monday, marching to yet more new highs as the week opened. High techs, including the magnificent 7, blazed ahead, lifting the S&P 500, 0.8% and Nasdaq Composite 1%. For the year the S&P 500 is up a surprising 15%, with economists and analysts calling for continued movement to high levels. As the economy shows strong signs of stability, with inflationary curbs that are working, investors and traders are at a new confidence level, willing to be more market active. The high tech sector is a good example, as strong consistent earnings, product development (chips and AI expansion), fill past voids. All 3 indexes, including the Russell 2000 are evidencing strong investment by seasoned and new investors. “We’re watching the Labor market closely for any signs that recent weakening might be a signal for the Fed to lower rates more than expected,” said Steve Wyett, chief investment strategist at BOK Financial. Big techs, the magnificent 7 and market favorites continued again on Tuesday to outpace the non-tech sectors, as was the case Monday. Tuesday’s rally stayed hot all day, with the S&P 500 and Nasdaq Composite finishing in higher plus territory. The S&P 500 has now finished higher for 31 straight days, a tribute to meaningful investment in the mostly high tech sector. ‘Wallflower’ investors [sideliners who dare to invest] are breaking stride, stepping up to ‘get a piece of the action,’ in AI and high tech.
With a mid-week holiday-off Wednesday, Thursday’s opening was pointed, 2 indexes up and one down. The Dow Jones Industrial Average opened with resolve, adding 300 points, with nearly all sectors showing nice gains while the sister indexes faltered. Both the S&P 500 and the Nasdaq Composite struggled, falling -13.86 and -140.64 respectively. The Nasdaq took the biggest hit as techs and chip equities took a ‘breather,’ losing steam.
The Wonderful World Of Sports… And the wonderful world of sports investing. Sports ownership interest is soaring with never before opportunity, now becoming a reality. The Baltimore Orioles, The Washington Commanders, The Boston Red Sox and Atlanta Braves, are the first of many teams now owned by the fans, including parks, parking facilities, food services and about everything connected to the team. Wherever professional teams exist, opportunity exists. Leagues, teams, in every sport, men’s and womens, are being scooped up by sports-minded entrepreneurs offering ownership to the interested sports investor. Over 50% of England’s Premier League teams are now owned by Americans. “Like elite athletes, investors will need all kinds of fortitude to realize the thrill of victory and avoid the agony of defeat,” as noted by Andy Serwer, writer at Barron’s.
RUMBLINGS ON THE STREET
Gerry Cardinale, Founder, RedBird Capital Partners, Barron’s “If I brought any other industry to you and said I’m going to pay premium valuations for a minority stake with no governance, no information rights, and no pathway to liquidity, you would laugh me out of the room.”
David Lefkowitz, head of U.S. Equities at UBS Global Wealth Management, WSJ “That growth and inflation mix is pretty favorable, and the other leg of the stool is the AI investment surge, which is tremendous,” ‘speaking about building out AI programs that would boost profit for semiconductor companies and utilities.’
Ariana Kugler, Fed Governor, Yahoo Finance, “If the economy evolves as I am expecting, it will likely become appropriate to begin easing policy sometime later this year,” she said. She added she remained “optimistic that improving supply and cooling demand will support continued disinflation.”
Susannah Street, head of money and markets at Hargreaves Lansdown, WSJ “What’s remarkable is, given the market’s reassessment of rate cuts this year–they’ve gone from expecting six cuts to now one–[equities] haven’t been upset by this,” sais Ms. Street. “That’s because AI has been the biggest story in town.”