Morning Commentary
Yesterday started off as a continuation of the prior day, ugly. It got uglier as the morning went on with decliners outpacing advancers about 9-1 on the NYSE and 4-1 on the Nasdaq. But by the afternoon, buying picked up and sentiment turned in part on comments from Fed Governor Waller that he is still in the 75-bps rate hike camp and open to higher rates only if the economic data warrants it.
Buyers stepped in and the Nasdaq was able to eke out a small gain. There was a complete reversal with advancers leading decliners 2-1 on the Nasdaq at the close. Victory, however, small. The Dow and S&P 500 closed in red but well off the lows.
Market Breadth |
NYSE |
NASDAQ |
Advancers |
861 |
1,459 |
Decliners |
2,368 |
3,094 |
New Highs |
3 |
17 |
New Lows |
379 |
453 |
Up Volume |
635.77 million |
2.21 billion |
Down Volume |
3.56 billion |
2.25 billion |
The Technology sector provided the leadership, helped by semiconductors on the heels of Taiwan Semi’s (TSM) earnings beat on the top and bottom line and raised guidance. When all was said and done, three of the 11 S&P 500 sectors, Technology, Consumer Staples, and Utilities finished in the green. Financials were the laggards, in part from earnings misses and comments from JP Morgan (JPM) and Morgan Stanley (MS), followed by Energy and Materials.
While Energy continues to maintain its year-to-date leadership, month-to-date Consumer Discretionary and Technology are outperforming.
The Heat Map remained largely red. The decline in oil stocks were offset by the strength in mega-cap stocks, suggesting fast money investors are leaking back into the names that made them profitable. Apple (AAPL) was a clear winner yesterday.
Portfolio Approach
There are no sector weighting changes this morning, but we are un-suspending our Current Buy list in the Hotline Model Portfolio.
Today’s Session
Several companies reported earnings with mixed results, including:
Many stocks have been so beaten down and there is blood on the street. Some represent excellent takeover candidates. Obviously, Elliot Management thinks so, as it took a 9% equity stake in Pinterest (PINS). Shares of PINS rose almost 14%.
Economic News
Retail Sales
June retail sales soared 1%, surpassing the consensus of +0.9% and the prior month was revised higher to -0.1% (from -0.3%). Control group came at +0.8%, also beating consensus of +0.3%, while the prior month was revised downwards to -0.3% (from +0%).
June Monthly Sales Retail & Food Services |
M/M |
Y/Y |
Headline |
+1.0 |
+8.4 |
Motor Vehicle & Parts |
+1.0 |
+10.6 |
Furniture |
+1.4 |
+4.6 |
Electronics |
+0.4 |
-9.1 |
Building Materials |
-0.9 |
+6.4 |
Food & Beverage (at home) |
+0.4 |
+7.1 |
Health & Personal Care |
-0.1 |
-0.6 |
Gas Stations |
+3.6 |
+49.1 |
Clothing |
-0.4 |
-0.2 |
Sporting Goods |
+0.8 |
+2.7 |
General Merchandise |
-0.2 |
+1.5 |
Department Stores |
-2.6 |
-2.9 |
Internet |
+2.2 |
+9.6 |
Food & Beverage (away from home) |
+1.0 |
+13.4 |
Highlights vs the prior month:
Import Prices
June U.S. import prices rose 0.2% from the prior month even as May was revised higher to 0.6%. For the year, as of June, prices have risen 10.7%. While fuel prices rose 5.7% in June, it was down from +6.5% from the previous month, the first decline since December 2021. Additionally, prices for nonfuel imports prices retreated 0.5%, declining for the second consecutive month. For the year however, US import prices advanced 10.7% in June.
Oil is up this morning to $97.15, but it is still down about 7% this week, and 20% since the highs set on June 13, 2022.
New York Empire State Manufacturing
The index climbed to 11.1 in July from -1.2 in prior month. This is the highest read for the index in the past three months and beat expectations of -2. However, of the companies surveyed, their six-month outlook has turned pessimistic, which has seldom occurred in the since the survey began.
New orders rose slightly, but shipments rose substantially. Delivery times increased and were the slowest pace in months. Unfilled orders were lower for a second consecutive month. Meanwhile, inventories rose.
Employment increased and the average workweek was somewhat longer. While still elevated, both the prices paid and prices received indexes where substantially lower, indicating that price increases may be starting to slow.
The futures are pointing to a higher open on the heels of the strong retail data.
Comments |
Yesterday morning as the market opened, I would have expected the DOW to be down over 1,000 points based on the terrible PPI inflation number. But, it wasn’t. Also, the market overall recovered nicely with the NASDAQ ending slightly up. With today (at least so far), this up market could be telling us that inflation peaked in June. Still believe we are in a bottoming formation that should conclude by late October - early November if not sooner. Still averaging down on dips. Tom Holcomb on 7/15/2022 11:55:16 AM |
Tweet |
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3/22/2024 12:56 PM | Toll on Americans |
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3/13/2024 2:16 PM | Taking a Breather |
3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
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