Traders Market Weekly: Cracks Widen in China and Emerging Markets

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  • #74519

    Hope everyone had a great Memorial Day weekend as we reflect on the honor & sacrifice of our troops

    Here are some facts and history on the holiday:

    The day was originally set aside to remember Union soldiers who died during the Civil War, but following World War I, its scope expanded to include those who died in any war or military action. At the end of the Civil War, many US cities held their own memorial observations for their hometown heroes.

    The idea for a specific holiday came in 1868 from Illinois Senator John Alexander Logan, a former Union general and keynote speaker at one early observation. Logan used his position as commander-in-chief of the Grand Army of the Republic, a fraternal organization of Union soldiers, to issue a proclamation for a national “Decoration Day” to be observed on May 30 of that year by decorating the tombs of Union soldiers.
    The name “Memorial Day,” started cropping up from time to time. The new name became more common after World War II, and in 1967 was declared the official name by Federal law.

    Memorial Day was celebrated on May 30 until 1968, when Congress passed the Uniform Holidays Bill, moving 4 holidays — Columbus Day, Presidents’ Day, Veterans Day and Memorial Day—to designated Mondays in order to create the ever-popular three-day weekends. (Veterans Day eventually reverted to its traditional November 11 date, which mirrors Armistice Day and Remembrance Day celebrations in the United Kingdom and other Commonwealth nations).

    #74520

    Dow 38,852.86 -216.73 -0.55%
    S&P 500 5,306.04 1.32 0.02%
    Nasdaq 17,019.88 99.09 0.59%
    VIX 12.91 0.98 8.21%
    Gold 2,360.80 26.30 1.13%
    Oil 80.17 2.45 3.15%

    We had a very RARE F1 tornado even in mtns. of SW Virginia (about 15 miles from home)
    Hopefully all of us can get a break from severe weather in days ahead

    https://www.msn.com/en-us/weather/topstories/update-salem-tornado-s-path-of-destruction-two-miles-long-300-yards-wide/ar-BB1nbZs4

    #74526
    TradersCom
    Keymaster

    Thank you for the insight and reminder of Memeorial Day CI – am back on deck after a few week’s off 🙂

    #74527
    MoneyNeverSleeps
    Participant

    The Dow Jones Industrial Average closed more than 200 points lower today while the Nasdaq Composite (+0.6%) closed at a fresh record high, above 17,000 for the first time, thanks to a late surge of buying activity in mega cap stocks.

    This price action also left the S&P 500 little changed from yesterday, but the index had been down as much as 0.4% earlier.

    NVIDIA (NVDA 1139.01, +74.32, +7.0%) provided some support to the broader market today due to the notion that xAI’s $6 billion capital raise will benefit the AI chipmaker.

    Other top performing mega caps that participated in the afternoon move higher included Amazon (AMZN 182.15, +1.40, +0.8%) and Meta Platforms (META 479.92, +1.70, +0.4%).

    Apple (AAPL 189.99, +0.01, +0.01%) had been trading up as much as 1.6% at its high, but shares were left out of the late surge.

    The information technology sector was one of only three S&P 500 sectors to close with a gain, benefitting from the upside move in NVDA and gains in other mega caps.

    The activity in Treasuries kept pressure on equities through the session.

    The 2-yr note yield settled three basis points higher at 4.98% and the 10-yr note yield rose eight basis points today to 4.54%.

    This price action was in response to a stronger-than-expected Consumer Confidence report for May, and today’s $69 billion 2-yr note and $70 billion 5-yr note sale, which met weak demand.

    Nasdaq Composite: +13.4% YTD
    S&P 500:+11.2% YTD
    S&P Midcap 400: +6.3% YTD
    Dow Jones Industrial Average: +3.1% YTD
    Russell 2000: +2.0% YTD

    #74528
    MoneyNeverSleeps
    Participant

    March FHFA Housing Price Index 0.1%; Prior 1.2%
    March S&P Case-Shiller Home Price Index 7.4% (consensus 7.0%); Prior 7.3%
    May Consumer Confidence 102.0 (consensus 96.0); Prior was revised to 97.5 from 97.0

    The key takeaway from the report is that consumers are feeling good about labor market conditions, which is important as that typically translates into increased spending activity.

    Looking ahead, market participants will receive the weekly MBA Mortgage Applications Index at 7:00 ET tomorrow. Wednesday’s calendar also features the release of the Fed’s Beige Book at 2:00 ET and the results of a $44 billion 7-yr Treasury note auction will be released at 1:00 ET.

    #74529
    MoneyNeverSleeps
    Participant

    U.S. Treasuries reached fresh lows after today’s second note auction—$70 bln in 5-yr notes—also met weak demand. The just-completed sale drew a high yield of 4.553%, which tailed the when-issued yield (4.540%) by 1.3 basis points while the bid-to-cover ratio (2.30x vs 2.47x average) and indirect takedown (65.0% vs 66.9% average) were below average. The post-auction selling has driven the 5-yr yield past its high from two weeks ago to a level not seen since the first week of May while the 10-yr yield has been lifted to a two-week high.

    $69 bln 2-year Treasury note auction results (prior 12-auction average):

    High yield: 4.917% (4.726%).
    Bid-to-cover: 2.41 (2.70).
    Indirect bid: 57.9% (64.7%).
    Direct bid: 25.5% (19.9%).

    $70 bln 5-year Treasury note auction results (prior 12-auction average):

    High yield: 4.553% (4.282%).
    Bid-to-cover: 2.30 (2.47).
    Indirect bid: 65.0% (66.9%).
    Direct bid: 15.4% (18.5%).

    #74531
    Truman
    Participant

    Warnings
    American Airlines (AAL) sees Q2 adjusted EPS of ~$1.00 to $1.15 versus prior guidance of ~$1.15 to $1.45; TRASM to be down ~5% to 6% versus prior guidance of down ~1% to 3%.
    AAL down 4.7%

    Earnings
    Box (BOX) beats by $0.03, reports revs in-line; guides Q2 EPS above consensus, revs below consensus; guides FY25 EPS in-line, revs below consensus… BOX up 0.8%
    CAVA Group (CAVA) beats by $0.08, beats on revs; comps +2.3%; raises FY24 EBITDA and comp guidance… CAVA down 6.3%
    Digital Turbine (APPS) beats by $0.05, misses on revs; guides FY24 revs in-line… APPS down 4.0%
    Ooma (OOMA) beats by $0.03, beats on revs, guides Q2 EPS and revenue above consensus, guides FY25 EPS above consensus, revenue in-line… OOMA up 16.4%

    #74532
    Truman
    Participant

    CCC Intelligent Solutions (CCCS) announces proposed secondary offering of 50 mln shares of common stock by affiliates of Advent International, L.P. and Oak Hill Capital Partners… CCCS down 3.0%

    Equity Residential (EQR) provides operating update for May 2024 and 1Q24; says normalized FFO, same store revenue, and NOI trending towards top of full year guidance ranges… EQR up 1.9%

    Merus (MRUS) announces proposed public offering of $300 mln of common shares… MRUS down 0.9%

    Microchip (MCHP) announces intention to offer $1.1 bln aggregate principal amount of Convertible Senior Notes due 2030 in a private offering…. MCHP down 2.4%

    Neurocrine Biosciences (NBIX) announces that Kevin Gorman, Ph.D., will retire as CEO on October 11, 2024; Kyle Gano, Ph.D., currently the company’s Chief Business Development and Strategy Officer, will succeed him as CEO… NBIX down 1.2%

    Robinhood Markets (HOOD) says board authorizes company to repurchase up to $1 billion of outstanding Class A common stock… HOOD up 3.6%

    #74533
    Truman
    Participant

    Fair Value for Wednesday, May 29:

    S&P 500: 5,320
    Nasdaq 100: 18,923
    DJIA: 38,918

    #74534

    Dow 38,441.54 -411.32 -1.06%
    S&P 500 5,266.95 -39.09 -0.74%
    Nasdaq 16,920.58 -99.30 -0.58%
    VIX 14.28 1.36 10.53%
    Gold 2,336.30 -20.20 -0.86%
    Oil 79.05 -0.78 -0.98%

    Is this the beginning of a BEAR or further SUPER BULL rally 🙂

    #74547

    Dow 38,111.48 -330.06 -0.86%
    S&P 500 5,235.48 -31.47 -0.60%
    Nasdaq 16,737.08 -183.50 -1.08%
    VIX 14.39 0.11 0.77%
    Gold 2,362.70 21.50 0.92%
    Oil 77.87 -1.36 -1.72%

    More COWBELL please 🙂

    #74549
    MoneyNeverSleeps
    Participant

    Dow -330.06 at 38111.48, Nasdaq -183.50 at 16737.09, S&P -31.47 at 5235.48

    The major indices closed with solid losses despite an underlying positive bias today. The market-cap weighted S&P 500 fell 0.6% and the equal-weighted S&P 500 closed 0.5% higher. Selling in some of the weightiest stocks picked up in the last half hour of trading, driving the afternoon deterioration that left the major indices near their lows of the day.

    NVIDIA (NVDA 1105.00, -43.25, -3.8%), which extended its early loss following a Bloomberg report that the US is slowing the issuing of Middle East licenses for AI chip makers, Microsoft (MSFT 414.67, -14.50, -3.4%), Alphabet (GOOG 173.56, -3.84, -2.2%), and Meta Platforms (META 467.05, -7.31, -1.5%) were losing standouts from the mega cap space.

    Dow component Salesforce (CRM 218.01, -53.61, -19.7%) was another influential laggard, sliding 20% on disappointing guidance.

    Losses in the aforementioned names led their respective S&P 500 sectors to close with solid declines. The information technology sector fell 2.5% and the communication services sector logged a 1.1% loss.

    The remaining nine sectors closed with gains ranging from 0.1% to 1.5%.

    The only sectors to close more than 1.0% higher were the rate-sensitive real estate (+1.5%) and utilities (+1.4%) sectors, benefitting from a drop in market rates.

    The movement in market rates contributed to the underlying upside bias in equities, along with some hopeful anticipation in front of the PCE Price Indexes tomorrow, which is the Fed’s preferred gauge on inflation. The 2-yr note yield fell five basis points to 4.93% and the 10-yr note yield declined seven basis points to 4.55%.

    The price action in Treasuries follows a slate of economic data this morning, including a downward revision to Q1 GDP, a widening in the goods deficit in April, an ugly 7.7% decline in pending home sales in April, and some otherwise decent initial jobless claims figures.

    Market participants were also digesting some mixed earnings news from retailers.

    Best Buy (BBY 81.55, +9.65, +13.4%) and Foot Locker (FL 25.89, +3.37, +15.0%) were among the winners in that respect. Meanwhile, shares of Kohl’s (KSS 21.02, -6.23, -22.9%) and Dollar General (DG 127.94, -11.34, -8.1%) slid after reporting quarterly results.

    CME Group index pricing for the Dow Jones Industrial Average and S&P 500 briefly froze around 10:41 ET, but began updating as usual around 12:00 ET.

    Nasdaq Composite: +11.5% YTD
    S&P 500:+9.8% YTD
    S&P Midcap 400: +6.0% YTD
    Russell 2000: +1.5% YTD
    Dow Jones Industrial Average: +1.1% YTD

    #74550
    MoneyNeverSleeps
    Participant

    April Adv. Intl. Trade in Goods -$99.4 bln; Prior was revised to -$92.3 bln from -$91.8 bln
    April Adv. Retail Inventories 0.7%; Prior was revised to 0.1% from 0.3%
    April Adv. Wholesale Inventories 0.2%; Prior -0.4%
    Weekly Initial Claims 219K (consensus 219K); Prior was revised to 216K from 215K; Weekly Continuing Claims 1.791 mln; Prior was revised to 1.787 mln from 1.794 mln

    The key takeaway from the report is that there wasn’t any notable change in initial jobless claims. They continue to comply with a generally solid labor market, the idea of which will comply with the market’s soft landing outlook.

    Q1 GDP – Second Estimate 1.3% (consensus 1.3%); Prior 1.6%; Q1 GDP Deflator – Second Estimate 3.0% (consensus 3.1%); Prior 3.1%

    The key takeaway from the report is the weakening in consumer spending activity, yet it should be noted that the 2.0% growth was in-line with average for the prior eight quarters. In other words, spending was weaker than the fourth quarter, but not weak enough to alter the market’s soft landing outlook.

    April Pending Home Sales -7.7% (consensus -0.5%); Prior was revised to 3.6% from 3.4%

    #74551
    MoneyNeverSleeps
    Participant

    Friday’s economic calendar features:

    8:30 ET: April Personal Income (consensus 0.3%; prior 0.5%), Personal Spending (consensus 0.3%; prior 0.8%), PCE Prices (Briefing.com consensus 0.3%; prior 0.3%), and Core PCE Prices (consensus 0.3%; prior 0.3%)
    9:45 ET: May Chicago PMI (consensus 41.0; prior 37.9)

    #74552
    Truman
    Participant

    Ambarella (AMBA) beats by $0.05, reports revs in-line; guides Q2 revs above consensus… AMBA up 15.5%
    Costco (COST) beats by $0.07, reports revs in-line, adjusted comparable sales of +6.5%… COST down 1.5%
    Dell (DELL) reports EPS in-line, beats on revs; guides Q2 EPS below consensus, revs above consensus; raises FY25 EPS and revenue guidance… DELL down 17.8%
    Gap (GPS) reports Q1 (Apr) results, beats on revs, comps up +3%; projects Q2 and FY24 net sales growth in-line with consensus… GPS up 21.5%
    MongoDB (MDB) beats by $0.13, beats on revs; guides Q2 EPS below consensus, revs below consensus; guides FY25 EPS below consensus, revs below consensus… MDB down 23.2%
    Ulta Beauty (ULTA) beats by $0.22, reports revs in-line; guides FY25 EPS below consensus, revs below consensus… ULTA up 10.1%
    Veeva Systems (VEEV) beats by $0.08, beats on revs; guides Q2 EPS above consensus, revs below consensus; guides FY25 EPS in-line, revs below consensus… VEEV down 13.3%
    Zscaler (ZS) beats by $0.22, beats on revs; guides Q4 EPS above consensus, revs in-line… ZS up 14.8%

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