Markets Roar Back, Inflation Data Pending

August 11, 2024

Markets Roar Back, Inflation Data Pending – Aug 9 Market Recap

Indices

Dow 39,497, -240 or -0.60%.
Nasdaq 16,745, -31 or -0.18%.
S&P 5,344, -2 or -0.04%.
MSCI EAFE 2283.64, -7.69 or -0.34%.
USD10Y 3.942%, +15.0bp or +3.96%.
WTI Crude $76.98 bbl, +$3.37 or +4.58%.

After much pearl clutching by the financial press following last week’s downturn and Monday’s selloff, markets roared back to finish nearly even for the week. Headlines loudly exclaimed how many points the indices had sold off instead of quoting the more insightful data point, how many percentage points the indices had shed. As a reminder, on Black Monday, October 19, 1987, the Dow Jones Industrial Average sold off 508 points or 22.6%! In contrast, on Monday, the DJIA sold off 1034 points or 2.6% and yet all the headlines quoted the points decline instead of the percentage decline. We should demand better from the financial press.

Just like the week prior, it was a quiet news week with strong U.S. Services data and a better-than-expected Initial Jobless Claims report the only real data points on which to focus. Interestingly, although services account for 76% of the U.S. economy and manufacturing only 24%, it was the ISM manufacturing number ten days ago that started the market decline while the strong services number on Monday had seemingly zero affect as the markets sold off strongly.

The Upcoming Week: Aug 12 – Aug 16

It’s a big week for economic data; wholesale prices (PPI) are released on Tuesday and consumer prices (CPI) follow on Wednesday. Manufacturing data from the East Coast is released on Thursday and it will be interesting to see how the market reacts after the ISM Manufacturing report started the whole selloff a week and a half ago. Thursday also brings some insight into the U.S. consumer with the July U.S. Retail Sales report.

Second quarter earnings are just about complete as 91% of the S&P 500 has reported. Of the few names remaining, Home Depot (HD), Cisco Systems (CSCO), Walmart (WMT), Ross Stores (ROST), and Applied Materials (AMAT) highlight this week’s calendar.

Economic Calendar

Monday – N/A. Earnings: N/A.
Tuesday – July Producer Price Index (PPI). Earnings: Home Depot (HD).
Wednesday – July Consumer Price Index (CPI). Earnings: Cisco Systems (CSCO).
Thursday – Initial Jobless Claims, August Empire State and Philadelphia Manufacturing Surveys. July U.S. Retail Sales. Earnings: Walmart (WMT), Ross Stores (ROST), Applied Materials (AMAT).
Friday – N/A. Earnings: N/A.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Last Week‘s Daily Trading Recap…

Monday – Dow -1034 to 38,703, Nasdaq -576 to 16,200, S&P -160 to 5,186, USD10Y -0.7bp to 3.785%.

All eleven S&P sectors traded down sharply today, led lower by Technology, Communication Services, and Consumer Discretionary.
July S&P U.S. Services PMI was slightly below expectations at 55 vs 55.9 and vs 56 last month, but still strongly in expansion territory.
July ISM Services was better than expected at 51.4% vs 50.9% expected and 48.8% last month.
Earnings: Freight and rail company CSX (CSX) beat earnings on inline revenues and traded up +3.33% post close. Tyson Foods (TSN) blew out their earnings estimates and traded up +2.09%.

Tuesday – Dow +294 to 38,997, Nasdaq +166 to 16,366, S&P 500 +53 to 5,240, USD10Y +10.3bp to 3.888%.

All eleven S&P sectors traded higher today, led by Real Estate, Financials, and Communication Services.
Earnings: Airbnb (ABNB) missed their earnings forecast on lower U.S. demand and traded down -16.64% post close. Caterpillar (CAT) beat their earnings expectations and jumped +3.04%. Uber (UBER) beat both their top and bottom-line estimates and traded up +6.39%. Yum Brands (YUM) beat their earnings forecast on slightly less than expected revenues; YUM traded up +2.65%. Rivian Automotive (RIVN) reported a smaller than expected loss on slightly better revenues and reaffirmed their 2024 loss projection; RIVN traded down -6.96% after hours. Super Micro Computer (SMCI) which many investors had been using as a substitute for Nvidia, missed their earnings estimates badly, announced a 10-1 stock split and traded down -13.28% in the extended session.

Wednesday – Dow -234 to 38,763, Nasdaq -171 to 16,195, S&P -40 to 5,199, USD10Y +8.0bp to 3.968%.

Seven of eleven S&P sectors traded down today, led lower by Consumer Discretionary, Materials, and Technology.
Earnings: Walt Disney (DIS) beat both their top and bottom-line estimates, turned a profit for the first time in their streaming division and noted softness in their theme park business; DIS traded down -2.31%. Robinhood (HOOD) blew out their earnings estimates and traded up +0.90% post close.

Thursday – Dow +683 to 39,446, Nasdaq +464 to 16,660, S&P +119 to 5,319, USD10Y +2.9bp to 3.997%.

Jobless claims fell to 233,000 vs 241,000 forecast and vs. last week’s slightly revised higher print of 250,000 (originally 249,000).
Earnings: Expedia (EXPE) beat both their top and bottom-line estimates but noted a more challenging macroeconomic environment and softening travel demand; EXPE traded up +10.71% post close.

Friday – Dow +51 to 39,497, Nasdaq +85 to 16,745, S&P +24 to 5,344, USD10Y -5.5bp to 3.942%.

Ten of eleven S&P sectors traded higher today, led by Communication Services, Technology, and Real Estate.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ACHR, AVGO, BITB, ETHE and GBTC.