Yesterday was another session that saw a market still vulnerable to the slightest negative headline, and yet, resolved to keep moving higher – reclaiming lost ground.
In the middle of the session, the headline read that Google is pausing hiring for two weeks. It was coupled with word that the Italian government was in turmoil, as they scrambled to find backing for Mario Draghi (this issue goes back to the 1800s, so any resolution will probably be temporary).
On Monday, news that Apple(AAPL) was slowing hiring derailed the market, but this is the new reality across the board, especially in technology.
The more intriguing news was Ford (F) laying off 7,000 employees to fund its electric dream ambitions. I thought electric vehicles (EV) were supposed to create jobs (not really). I continue to believe we will see shocking developments on upcoming labor reports. So, kiss those 11.0 million job openings goodbye.
After the close, Microsoft (MSFT) cut job openings across the board, including its cloud business.
The Russell 2000 led the way among large equity indices with a +1.59% rally. The top five winners were all in the medical space: Rhythm Pharmaceuticals (RYTM) +25% (peptide therapeutics), Allakos Inc. (ALLK ) +22% (therapeutic antibodies), Acutus Medical (AFIB) +21% (medical devices), CorMedix (CRMD) +18% (medical devices), and Oyster Point Pharma (OYST) +18% (ocular surface diseases).
The iShares Russell 2000 ETF (IWM) breakout is very impressive. After filling the gap, the next leg higher should be to 195.
Seven of eleven sectors were higher with growth ETFs leading the way, as investors continue to focus on the most beaten-down names for potentially the fastest and largest short-term bounces. But, as I have been saying, watch for defensive names to fall back as the broad market rebounds.
Tesla (TSLA) was holding gains after the close, although Musk lost some Bitcoin (BTC) fans.
There are no sector weighting changes in our Hotline Model Portfolio this morning.
It’s been a busy morning for news with the ECB hiking rates for the first time in more than 4,000 days, more corporate earnings, and more data pointing to a rapidly slowing economy.
Initial jobless claims climbed to 251,000. This is the highest level since Nov 13, 2021 – the street was looking for 240,000. Equity futures limed on the news, perhaps in hopes it could slow the Fed from going too far with quantitative tightening.
Continuing claims are also on the rise.
Prices Coming Down
The Philly Fed manufacturing numbers were horrific, as Current and Future Activity plunged to contraction territory. The good news is prices are lower. This is what the Fed wants – derail the economy to save the economy.
I want to thank everyone that attended the paid subscriber call last night – I’m overwhelmed and humbled at the number that took time out of the evening. More importantly the questions were great.
I feel like we are in this together.
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