Key Takeaways

  • S&P 500 Hits Record High, Driven By Non-Tech And AI Stocks
  • Financial Sector Gains As Citibank And Goldman Sachs Rise Before Earnings
  • Powell Hints At Rate Cut Amid Weakening Labor Market Concerns

I swear I’m not cutting and pasting from prior articles when I say, stocks moved higher yesterday. For the 36th time this year, the S&P 500 notched a new closing high, adding 0.1% while the Nasdaq Composite gained 0.14%. However, unlike most new closing highs, yesterday’s gains were largely driven by stocks outside of technology and Artificial Intelligence (AI).

The financial sector saw strong gains Tuesday. Shares of Citibank gained 3%. Goldman Sachs also saw its stock move higher with a gain of over 1.5%. I find this interesting because banks will begin reporting earnings on Friday with Citibank, JP Morgan and Wells Fargo all scheduled to report. Bank stocks are a bellwether for the economy overall. Their insight into commercial lending and consumer credit card debt is key when it comes to giving an informed view of economic strength. That we saw some of those stocks begin moving higher in advance of earnings is noteworthy not just in terms of what it could portend for overall economic strength, but also in terms of broadening out market leadership.

At the same time, we saw some of the financials begin picking up momentum, Federal Reserve Chairman Powell started his two-day testimony on Capitol Hill on Tuesday. In prepared remarks Powell commented on the weakening labor market of late. While the unemployment level is still just 4.1%, we have been seeing downward revisions of prior job reports. His comments on the weakening job market were taken as a sign the Fed is strongly considering an interest cut later this year. According to the CME Fed Watch Tool, chances of a rate cut in July are less than 5%; however, for September, those probabilities are over 75%. Powell will continue his testimony today.

There are some individual stocks making news that I’m following today. Shares of Honeywell are indicated slightly lower. The company announced they will be buying Air Products & Chemicals Inc.’s liquified natural gas process technology and equipment for $1.81 billion. 3M saw its stock drop nearly 2% after the company’s CFO resigned just two months after the company appointed a new CEO. At the other end of the spectrum, glass-maker Corning Inc. has seen its stock rally nearly 16% since last Friday. On Monday, the company raised its second quarter guidance. Demand for Corning’s optical connectivity products which are used to power networks running generative AI were the catalyst behind the move.

We’ve also seen a massive move in shares of Tesla going back to last week. The stock hit a low of just below $139 back in April and were then stuck in a trading range between $170 – $180 for much of the past couple months. Since June 24th, the stock is up an astounding 44%. Apple has also seen its stock move higher by nearly 9% since the end of June, retaking its spot as the most valuable company. Shares of Apple have been rallying ever since their World Wide Developers Conference announcement regarding efforts in the AI space.

For today, I’ll be listening to hear what Chairman Powell has to say. Although his prepared remarks will largely mirror what he said yesterday, there could be a question asked of him that markets cling to. I’m also watching to see if volatility begins creeping higher in advance of tomorrow’s Consumer Price Index (CPI) report. Expectations are for Core CPI to be up 0.2% on a month-over-month basis. And then I’m also paying attention to financial stocks ahead of Friday’s kick off to earnings season. As always, I would stick with your investing plan and long-term objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.

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