Article published at 9:45 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Stock market continues to grind higher despite geopolitical and economic woes
- Dow settled in record territory
- Nasdaq and S&P 500 charting best quarters in years
Today marks the end of what is turning out to be a monster first half for the markets. All three major indices are chalking up “best-of” quarters despite the rocky geopolitical issues and choppy trading that has been prevalent across the board during the period.
The markets have proven to be the ultimate grinder as they keep crushing it despite a lot of hand-wringing that has gone along with this incredible rally that has endured deep selloffs, the Iran war and a number of other outside influences. It reminds us not to get too emotional on the downside.
Yesterday, for example, it was déjà vu all over again as a broad market rally was spurred by sharp gains in mega-cap tech stocks, recovering after last week’s bruising, and another round of optimism that geopolitical issues will get ironed out. The intense investor interest in AI-related stocks is likely to continue, though volatility may still surface.
All three major indices embraced the investor sentiment, with the Dow Jones Industrials breaking another record and settling above 52,000. Some of that was thanks to Alphabet’s debut as a blue-chip member with its 3.2% advance to help push the Dow up 0.59%. The Dow was trading higher in pre-market action, but has gripped the flat line in the early going.
The S&P 500 is charting its best three months since the same period six years ago, which was mostly tied to the recovery of the initial pandemic selloff in 2020. If it stays higher, even slightly, it is treading toward record territory again, after closing Monday higher by 1.18% and roughly 10% year-to-date yesterday.
Then there’s the tech-heavy Nasdaq Composite, which has stolen the market headlines for much of the quarter, and, indeed most of the first half of the year. In the early going, it, too, is edging into positive terrain after yesterday’s significant climb upward by 2.07% at the close. Both indices have surprisingly strong corporate earnings and what appears to be insatiable investor demand for anything AI-related as their power sources this year.
But in the dichotomy that is the Nasdaq, the index has rocked higher by an extraordinary 24% to mark its best quarterly track record since 2020 as well. However, in June, it gave up 4.68%, a sign of investor worries about the rampant spending on AI that has yet to prove its earnings worth. Again, don’t let the downs get you, well, down.
As we noted, AI-related volatility is likely to continue, but some of the biggest names in chips have surged during the quarter: Micron, jumped 237%, Sandisk vaulted 228%, Intel by 196%, Marvell leaping 178%. On the year, Micron shares have lobbed up and down a number of times, but are still higher by an amazing 302% so far.
Crude oil, however, did not find its happy place amid the U.S.-Iran talks that are hitting the Strait of Hormuz roadblocks for oil containers. WTI crude, which was falling below $69 last week for the first time since the conflict was initiated in March, found its way back up. By the time the bell rang, the price per barrel had jumped 2.2% to settle at $70.75, and is headed higher again today, treading in the $71.28 per barrel.
JOLTS, Job Openings and Labor Turnover, data is expected to moderate slightly lower than April’s job openings. Wall Street is looking for some 7.3 million openings. Whatever the number, it will be interesting to see if the data still has the influence with monetary policy with the Federal Reserve, under new Chair Kevin Warsh.
Keep an eye on Comcast shares as it proceeds with a spinoff of NBCUniversal, which has sparked talk about more media deals in the working. Comcast shares jumped 3.2% at the open.
Investors will be on the lookout for Nike’s earning after the close. The company appears to have lost its mojo with shares significantly underperforming, sinking again today in a freefall that has seen the stock give up more than 73% in the last five years. Can the once powerful athletic gear market reset the bar again? Is China still a problem? Stay tuned.
Constellation Brands will shed some light on the story about how younger drinkers are practicing “mindful drinking” when it reports how beer and alcohol sales are trending, which have been soft.
Good trading!
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