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Morning Commentary

BUYERS STEP UP, AGAIN!†

By Charles Payne, CEO & Principal Analyst
6/4/2024 9:47 AM

Whoa, it happened again!  The market was lurching into freefall mode when buyers suddenly materialized yesterday at the one o'clock hour. Unlike the reversal we saw on Friday, growth stepped up to carry the load this time. 

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The one-two punch of Communication Services (XLC) and Technology (XLK), with help from Health Care (XLV) (read Eli Lilly (LLY)), offset declines in the other eight sectors. 

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S&P 500 Map

Tech Carrying the Load

Technology (XLK) stocks have never been this influential to the overall market since during the dot.com era. 

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The Technology Sector has been a locomotive, but the rate of change has slowed as fewer names are surging. 

Chart

Leadership & Breadth

Nvidia (NVDA) & Friends yesterday included cruise ship operators, pharmaceuticals (get ready for more vaccines), and Boeing (BA), which shook off rumors of hair deliveries in China.

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The market breadth was essentially even, although the up volume was significantly higher than the low volume, suggesting buyers are earnest about buying dips.

Market Breadth

NYSE

NASDAQ

Advancers

1,317

2,097

Decliners

1,491

2,175

New Highs

132

104

New Lows

49

108

Up Volume

1.75 billion

3.35 billion

Down Volume

2.2 billion

1.98 billion

Speedy Economic Decline

On May 14, the Atlanta GDPNow tool saw the second quarter of 2024 (2Q24) Gross Domestic Product (GDP) at 4.2%. At the close yesterday, it was down to 1.8%.

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Consumer spending was estimated to be 4.0%. Now, it’s 1.8%, while non-residential investment has declined to -4.0% from +5.8%, and residential has swooned to -4.4% from 2.0%.

More Economic Data On the Docket 

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Today’s Session

Stocks look to open under pressure, yet again, setting up another test.

We are watching the bond market very closely.  It made a nice, but unheralded move. For stock investors, the ten-year yield under 4.5% has been a green light to own stocks. I think a move below 4.30% would be the signal to shift into an even higher buying gear.

This is still the longest bond rout and buying might be tentative despite all the bulls.


 

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