Monday, July 5, 2021 – Markets Closed - Independence Day Observed
Tuesday, July 6, 2021 – DIA 345.82 -.61%, QQQ 360.19 +.43%, SPY 432.93 -.18%
ISM Services PMI came in much weaker than what the market had been expecting 60.1 v. 63.5. On top of that headline number, the ISM Services Employment Index fell dramatically to 49.3 v. 57 expected. (Below 50 is contractionary.) The ISM Prices Paid component remained elevated at 79.5 v. 79.3 expected. In response, government bonds rallied and yields dropped. The yield curve flattened as bonds took off as reflected by the 10-year Treasury note index (TNX) 13.70 -.61. The usual beneficiaries benefitted as borrowing got cheaper. Real Estate (XLRE) 45.12 +.89% led the S&P 500 followed by Utilities (XLU) 64.29 +.42%. Reacting to the lower and flatter yield curve as well Financials did not participate as (XLF) underperformed 36.36 -1.57%. After OPEC failed to announce news of a production increase over the weekend, oil traded higher on the news but ended sharply down on the day.. As a result, Energy Services (XLE) 52.91 -3.25% was hit hard and was the worst-performing sector. Losers included; Diamondback (FANG) 91.17 -7.03%, Halliburton (HAL) 22.23 -6.52%, and Occidental (OXY) 30.51 -6.35% which were the 3 worst performers in the S&P 500. China's technology shares came under pressure as the nation continued its regulatory crackdown. As a result, bellwethers JD.com (JD) 72.39 -5.04%, Baidu (BIDU) 186.95 -4.96% were at the bottom of the NASDAQ 100 performance. On the upside, Kraton Corporation (KRA) 36.37 +14.91% bolted higher on reports from Reuters that the specialty chemical company might be for sale. Alector (ALEC) 39.44 +12.01% continued higher buoyed by last week's announcement that the company was partnering with GlaxoSmithKline (GSK) for antibody-based disease treatments for Parkinson’s and Alzheimer’s.
Wednesday, July 7, 2021 – DIA 346.92 +.32%, QQQ 360.95 +.21%, SPY 434.46 +.35%
The JOLTS (Job Openings and Labor Turnover Survey) report was released showing a lower level of job openings available to be filled at 9.209M v. 9.388 expected. At 2 pm the widely anticipated FOMC minutes were released, and the market took the information as benign. Basic materials (XLB) 82.5 +1.04% was the lead sector on the day. Steel company Nucor (NUE) 95.69 +3.39 was among the best S & P 500 performers on the day. The thermal coal company Peabody Energy (BTU) 10.01 +24.50% bolted higher on reports of better pricing due to customers switching back to coal from higher-priced natural gas. Energy Services (XLE) 52.05 -1.63% again was hit hard for the second day in a row; Diamondback (FANG) 87.99 -3.49%, Occidental (OXY) 29.48 -3.38%, & Valero (VLO) 72.31 -3.20. Travel stocks were hit hard on worries that the latest variant of the COVID-19 virus could slow the recovery. Carnival Cruise Lines (CCL) 24.08 -3.76%, Norwegian Cruise Lines (NCLH) 27.05 -3.6%, & American Airlines (AAL) 20.31 -3.33% were awash in a sea of red. Gambling & hospitality giant Wynn Resorts (WYNN) 112.91 -3.41% broke down from a triple bottom to the downside after the stock had a 4 month period of consolidation/distribution. Today's winners today included semiconductor firm Smart Global Holdings (SGH) 56.02 +17.81% which bolted higher after reporting better than expected top and bottom-line results. Once again we saw bullish guidance from a semiconductor company and upbeat earnings guidance.
Thursday, June 8, 2021 – DIA 344.38 -.73%, QQQ 358.77 -.60%, SPY 430.92 -.81%
Initial Jobless Claims came in higher than expected at 373K v. 350K expected, but well off the pandemic highs. Markets reacted to news that Japan would declare a state of emergency related to COVID-19 and that the upcoming Olympic games would not have spectators in the stands. A flight to safety ensued as evidenced by the 10-year Treasury note index (TNX) 12.88 -.33 dropping below its 200-day moving average. Financials (XLF) 35.68 -2.00% were hit hardest on the day. Travelers (TRV) 148.52 -2.41% was among the worst performers in the DJIA followed by Goldman Sachs (GS) 358.94 -2.37%. The rails came under selling pressure as news of a Wall Street Journal report circulated that cited anonymous sources saying that the Biden administration would push regulators to confront consolidation. The Railroads and shipping stocks tanked on the news as investors perceive these policies to be an anti-competitive business. The carnage was evident: Kansas City Southern (KSU) 262.79 -7.87%, Norfolk Southern (NSC) 253.78 -7.16%, and CSX Corporation (CSX) 30.95 -6.16% were among the top losers. On the upside and continuing a recent pattern of high volatility, Virgin Galactic (SPCE) 52.69 +17.30% advanced as traders anticipate Richard Branson’s first flight into space.
Friday, July 9, 2021 – DIA 348.73 +1.26%, QQQ 361.01 +.62%, SPY 435.51 +1.07%
No high impact economic data released on the day. The markets reversed course from Thursday's selling squall after key market indicators in the previous session showed potential bottoming signals. The 10-year Note Index (TNX) 13.56 +.68 & Financials (XLF) 36.69 +2.83% led the way with Goldman Sachs (GS) 371.76 +3.57%, Travelers (TRV) 153.33 + +3.24%, & JPMorgan (JPM) 155.77 +3.20% showing strength. The rally is also ahead of next week's earnings reports for most of the big banks. Credit card company Discover Financial Services (DFS) 122.40 12 +6.19% led the S&P 500 as it was upgraded by Citigroup to buy from neutral-along and a new price target of $150 from a previous target of $101.The company plans to report earnings on July 21.Energy (XLE) 52.82 +2.13% rebounded as oil & gas driller NOV Inc. (NOV) 15.03 +5.99% soared. In M&A activity Stamps.com (STMP) 324.23 +64% agreed to an all-cash 6.6 billion dollar buy out by private equity firm Thoma Bravo. In high volatility trading, Virgin Galactic (SPCE) 49.20 -6.62% continued its recent pattern of big swings with a down day.
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