Market Recap Week Ending June 11
The week in review…Dow (277) or (0.79%), Nasdaq +255 or +1.8%, and the S&P +18 or +0.42%. Markets traded sideways this week (with the exception of the Nasdaq) in anticipation of the inflation data that was released on Thursday. Pricing pressure came in even higher than expected, yet despite that, markets traded higher, and the 10-year yield decreased by 10 bp over the week from 1.55 to 1.45%, demonstrating the old maxim that “the markets can remain irrational far longer than you (the individual investor) can stay liquid.” All eyes are now upon Fed Chairman Powell’s debriefing upon the conclusion of the Fed meeting on Wednesday. Market observers will be searching for any indication that the Fed will begin to reduce their monthly asset purchases.
What we are watching next week…
Tuesday – Federal Open Market Committee meeting begins, Retail Sales, PPI, Empire State Manufacturing, Oracle (ORCL) reports.
Wednesday – Housing starts, Fed Chairman Jerome Powell briefing.
Thursday – Initial Jobless Claims, Philadelphia Fed.
Last week’s trading…
Monday – Dow (126) to 34,630, Nasdaq +67 to 13,881 and the S&P (3) to 4,226. It was another mixed day for the indices today. Only four of the eleven S&P sectors traded higher led by Real Estate and Communication Services. Materials was the worst performing sector. The 10-year yield ticked up 2 bp to 1.57%…
Over the weekend there was an agreement in principle amongst the G7 to impose a global minimum tax of 15%…Secretary of the Treasury Yellen, in making the case for the President’s infrastructure bill, endorsed higher rates as a plus for society and the Federal Reserve…Marvell Technology (MRVL) traded up 2% after beating numbers…Biogen (BIIB) popped 38% after FDA approval of their Alzheimer’s drug despite mixed data surrounding its efficacy. The “meme’ trade was alive and well today with the four BANG stocks (Blackberry BB, AMC Entertainment AMC, Nokia NOK, and GameStop GME) up 13.78%, 14.8%, 2.37% and 12.74% respectively.
Tuesday – Dow (30) to 34,599, Nasdaq +43 to 13,924 and the S&P +1 to 4,227. Today saw another rudderless session as investors await the inflation data due on Thursday. Six of the eleven S&P sectors traded higher led by and Consumer Discretionary and Energy. Consumer Staples and Utilities were the two weakest sectors. The 10-year yield traded down 5 bp to 1.525% despite a record number of job openings created in April. The JOLTS number (Jobs Openings and Labor Turnover Survey) reported that 9.3 million job openings were recorded in April, a new high, and easily beating the expected 8.18 million number…The “meme” trade continued to spread as Clover Health and Wendy’s rallied 86% and 25.8% respectively….
Wednesday – Dow (152) to 34,447 , Nasdaq (13) to 13,911 and the S&P (8) to 4,219. Another slow and choppy trading day as investors await tomorrow’s inflation and jobless claims number. Seven of the eleven S&P sectors traded lower today with Financials and Industrials leading the way lower while Healthcare and Tech were among the few bright spots…Despite the conventional wisdom that the inflation numbers tomorrow will run very hot, the 10-year yield traded lower again today, down 6 bp to 1.47% before rallying some to finish at 1.49%….
Thursday – Dow +19 to 34,466, Nasdaq +108 to 14,020 and the S&P +20 to 4,239 (new record high). The inflation numbers hit and as expected, they were a doozy! The Consumer Price Index (CPI) was up 5% vs (4.7% last month) over the last 12 months, the largest increase over a 12-month period since August of 2008. Core CPI (excluding food and energy) was up 0.6% (seasonally adjusted) vs 0.9% last month. Energy costs, up 28.5% over the last 12 months (driven primarily by higher gasoline prices) drove the CPI number. Like last month, prices for used cars and trucks (up another 7.3% in May) accounted for nearly 1/3 of the Core CPI increase. Economists and at least at this time, investors, believe that the increase in prices is temporary. The 10-year yield agreed, falling another 3 bp to 1.438%. Jobless claims continued to come in almost perfectly, just missing expectations but declining enough to set a new pandemic era low and satisfy market participants (376k vs 370k expected vs 385k last week). All three indices traded higher despite only six of the eleven S&P sectors participating in the rally. Real Estate and Technology were the leaders while Financials and Industrials were the worst of the laggards.
Friday – Dow +13 to 34,479, Nasdaq +49 to 14,069 and the S&P +8 to 4,247 (new record high). Seven of eleven S&P sectors traded higher today as the S&P set a new record for the second consecutive day. Consumer Discretionary and Healthcare led the markets higher. Energy and Real Estate were the worst performing sectors. The 10-year yield continued rose 1.5 bp to 1.453%. Having digested the inflation data from yesterday, market observers are now awaiting Fed Chair Powell’s debriefing from the Fed meeting next Wednesday. Expect the markets to continue to trade sideways until that debriefing.
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Disclaimer: This is not a recommendation to either buy or sell any of the securities listed above. The author personally owns, or controls a family member’s account which owns, the following…Bitcoin (coin), Cardano (coin), Chainlink (coin), Ethereum (coin), ETHE, GBTC, and TSLA.