The Buzz on Business for June 26th 2024

For most of the last forty years, we’ve flattered ourselves and believed we understood the financial markets. We’d taken the coursework, read the books and lived the life. We could—and did--hold forth on technical analysis, fundamental analysis, buy and hold investing and swing trading the fifteen-minute bars. We taught classes, had our own little radio show, and were called upon by journalists. If you wanted to know what was happening on Wall Street, we were your guy. We were often wrong, but never, never in doubt.

Perhaps it is marbles getting lost or screws coming loose in our old age but with respect to the market over the last month or so, actually since May 17^th, when the Dow closed above 40,000 for the first time, we are genuinely, profoundly bewildered.

Beginning in mid-May, the S&P and NASDAQ rallied to new all-time highs, while the Dow sold off. Last week the Dow rallied while the broader market corrected.

That continued on Monday when the Dow had a good day, while the S&P and NASDAQ suffered, not insubstantial losses.

Yesterday, it was the Dow selling off while the S&P and NASDAQ had pretty good days, especially the NASDAQ.

Markets move together. They’re correlated. That’s one of the challenges in portfolio design. The macro-economic and financial factors that affect one stock affects them all, to one extent or the other. At least that is the case in healthy markets.

Then there are the market internals. Volume has been falling in recent weeks. Yesterday was the lowest volume since Thanksgiving. Even Christmas Eve saw more shares trade hands than did yesterday. Huh?

And on a day that the S&P 500 and the NASDAQ Composite posted strong gains, declining stocks outpaced advancing stocks by nearly two-to-one. What does it all mean?

Did you hear what Foo Fighters frontman Dave Grohl had to say about Taylor Swift?

Stock Market Report

Stocks finished mixed, as volume and breadth continued to fall.

• The Dow Jones Industrial Average fell by 299 points. That’s just over three-quarters of one percent and they closed at 39,112.
• The S&P 500, on the other hand was up twenty-one points and it closed at 5,469, a gain of four-tenths of a percent.
• The NASDAQ Composite had a pretty good day. It was up 221 points, 1.25% and closed at 17,718.
• And the Russell 2000 gave back all of Monday’s gains. It was down four-tenths, that’s a bit over eight points and it starts the day today at 2,022.

Bond Market Report

Not much to report from the Bond Market either.

• The yield on the 2-year treasury was up just two basis points and it closed at 4.747%.
• The 20-year was up just one measly tick! And it now yields 4.485%

Oil, Gold, and Bitcoin

• Oil was up Monday, and down yesterday. It closed at $80.71, off $0.99.
• Likewise, Gold gave make Monday’s gains. It was down, $12.70 and a troy ounce now changes hands at $2,331.90.
• Bitcoin suffered big losses on Monday and got most of them back on Tuesday. It was up $2,691.33 and at 4:00 PM ET was back above $60,000 at $62,034.67.

Economic Data Drought Ends Tomorrow

Part of the explanation for the moribund stock and bond markets has been the paucity of news so far this week. That continues today.

We do get some data out of the housing market. Building Permits and New Home Sales get released. These are interesting data, given the interest sensitive nature of construction and the higher for longer interest rate environment. We’ll be watching but don’t expect a big impact on the markets.

Tomorrow, we get Initial and Continuing Jobless Claims. The labor market has been mixed lately, although the Thursday unemployment numbers have been weakening.

We also get the Gross Domestic Product numbers for the first quarter. Expectations look weak to us.

And the Personal Consumption Expenditures Complex—the Fed’s preferred measure of inflation—begins two days of reports tomorrow as well.

Everyone here at the Ministry of Truth is well rested and ready—eager even—to dig into the numbers as they come out so that we can report all of it to you. Here on the Buzz.