Technical difficulties? In some way.
I have no trouble reading the charts, but on Wednesday afternoon I had problems with my internet server. The service went in and out for several hours, forcing the merchant (that’s me) to take a couple of hours off work. After taking back control of the bridge (my desk), I quickly noticed that the Dow Jones Industrials were lower, but that both the S&P 500 and Nasdaq Composite were higher, as was my P / L. Oh happy day. But was it really? My verdict would be … no, not really.
Equity markets had a harder day on Wednesday than meets the eye.
Yes, as we just said, the two largest and most closely followed large-cap indices had “active” days. The S&P 500 dropped half of one percent, and the Nasdaq Composite nearly doubled. Huzzah
Not only was the Blue Chip Index (DJIA) shaded red, but eight of the average 30 component members gave up more than a full percentage point for the session. They were not alone. At the other end of the market cap spectrum, the Russell 2000 surrendered 0.97%, while the S&P 600 headed for 1.45%.
Hmm. So the elites gave way and so did the small caps, while the market as a whole seemed to find upward support. What the hell does that mean?
Transports shaded in red too. Despite an 11% breakout on the positive side for FedEx (FDX). United Parcel Service (UPS) also had a good day. The underperforming ones in the transport arena certainly did not come from the world of delivery services. Transports that lost 2% or more during the day included Kansas City Southern (KSU), Norfolk Southern (NSC), CSX Corp. (CSX), Ryder (R), JB Hunt (JBHT) and Kirby (KEX). Truckers, railways and maritime transport. Basically, the economy moves away from the demand created by a reality of “staying home” or “working remotely.”
Therefore, while Internet stocks supported the Communications Services sector, and Software kept the Information Technology sector afloat, the market was led by REITs, Public Services, and Healthcare. A mix of overly defensive guys with what looks like growth. Oh, and trading volume was on the bright side.
Stunned and confused
The Nasdaq Composite hit a new all-time record in a market that, at least on Wednesday, seemed to be a sensation in the dark looking for direction. With that said, investors will pick up a ton of job-related data on Thursday. The figures released by ADP for private sector job creation for June were truly impressive when combined with an incredible upward revision for May. June manufacturing surveys looked strong, at least relative to May. The upgrade was right where you need to see it by asking purchasing managers questions: on new orders and in production. One would think that such data bodes well. If it wasn’t for the damn virus.
On that front, there was some positive news regarding very early data on a candidate for a Covid-19 vaccine in which Pfizer (PFE) has been collaborating with BioNTech (BNTX). Very small sample size. Entering a larger studio this summer. Still a long way (like in several months, probably more … at the earliest). This is what I had to say about Pfizer yesterday.
What probably mattered the flow of capital through the equity space on Wednesday more than some slightly positive macroeconomic data, or progress toward obtaining a vaccine, were reversals of recently reopened economic restrictions in several states, as well as the voluntary corporate pullback on These reopens of well-known American brands.
This and that
First it was Apple (AAPL) that announced the closure of 30 additional stores in various states. This brings the number of Apple retail stores that had to close after reopening to 77, out of a total of 271 stores in the United States. Then it was McDonald’s (MCD).
McDonald’s had begun allowing limited “dinner” services in jurisdictions where such activity had been permitted in May. The chain had been operating, as it has for the most part, the entire restaurant industry, strictly as a drive-through, take-out and delivery type operation. the Wall street journal reports that approximately 2,200 of the chain’s 14,000 locations in the U.S. welcomed customers again. Plans to continue reopening the interior of these stores will now be paused for three weeks. The company did not add the words “at least”, but something tells me that those words could have been added.
It is not just McDonald’s. New Jersey Governor Phil Murphy has delayed the reopening of “inland meals” in that state, while Governor Andrew Cuomo has done the same for New York City, while leaving the “dinner” option open. elsewhere in the state where politics had already been in place
Me? I’m fine with a bologna sandwich in front of the television. That is my “dinner” option. On a crazy day, I’ll even drive or pick up on the sidewalk … wearing a mask and latex gloves, as long as I know the establishment is equipping employees in a similar way.
Politics
There were no big surprises in the Wednesday afternoon publication of the FOMC minutes for the most recent central bank policy meeting. Basically, the committee is committed to supporting the economy for as long as it takes. If there were any topic for the speech, it would be in the line of control of the yield curve, but it would seem to me that we are already more than half the way, if not in word, at least in fact.
The surprises may have been in President Trump’s interview on Fox Business Network on Wednesday afternoon. As a child, I used to love the scream, the sound that old UH-1 Bell Iroquois (Huey) used to make when approaching. We were young, but for our sergeants who had been deployed to Vietnam, that sound represented help on the way or a way out of there. We taught young puppies to love Huey as much as they do. Well, there seems to be more helicopters on the way for the masses.
We all know that House Democrats approved an additional fiscal support package in May that would include another round of $ 1,200 payments to individuals, in addition to extending the weekly federal boost of $ 600 to state unemployment benefits through January this year. When asked if he supported the possibility of another round of stimulus checks, he said, “Yes, I do, but it must be done correctly.” Trump added: “I actually support larger numbers than the Democrats.” The President also spoke of creating an incentive to work.
what does all that mean?
Stimulus checks with conical weekly unemployment payments? Or maybe a “back to work” bonus? We will know more when we know more. We will know more in about four weeks.
Just a thought
With all the news revolving around Boeing (BA), one wonders exactly where this name becomes a “buy.” OR when it becomes a “purchase”. Certainly much depends on the activity of the coronavirus. As the virus spreads, the demand for air travel will continue to decline. As fiscal budgets are further stretched, the increase in defense spending becomes less secure, for the US and for other western-style nations that could buy Boeing hardware.
Speaking just for me, I’m really not interested above the area between the 40-day simple moving average at $ 158 and the 505 retracement level of the March to June rally, which has already been tested once. Otherwise, this name can come and go without me. I don’t need volatility.
June employment situation (08:30 ET)
Non-farm payrolls: Waiting for 3M, Last 2,509M.
Unemployment rate: Waiting 12.4%, Last 13.3%.
Underemployment rate: Last 21.2%.
Participation rate: Last 60.8%.
Average hourly earnings: Last 6.7% y / y.
Average weekly hours: Last 34.7 hours.
Another economy (All eastern times)
08:30 – Initial unemployment claims (weekly): Last 1.48M.
08:30 – Continuous unemployment claims (weekly): Last 19,522M.
08:30 – Trade balance (May): Last – $ 49.4B.
10:00 – Factory orders (May): Last -13% m / m.
10:30 – Natural gas inventories (weekly): Last + 120B cf.
13:00 – Counting of the Baker Hughes oil platform (weekly): The last 188.
The Federal Reserve (All eastern times)
There are no public appearances scheduled.
Highlight of Earnings Today (EPS Expectations Consensus)
Before the Open: (KFY) (0.39)
After closing: (JEF) (-0.03)
(Apple participates in Jim Cramer’s PLUS Action Alerts member club. Want to get an alert before Jim Cramer buys or sells AAPL? Learn more now.)
Receive an email alert every time I write an article for real money. Click “+ Follow” next to my byline for this article.
.
