The Buzz on Business for July 12th 2024

Yesterday, on this podcast, we prattled on about how the market had just broken out after a period of consolidation and then we took a victory lap on how we had predicted the whole thing.

We were wrong.

However strange the market may or may not have been over the last several weeks, it was nothing compared to what we saw on Wall Street yesterday.

Not only did the broad market not follow through on Wednesday “break out,” the S&P 500 and Nasdaq Composite, which have been leading the way over the last two months, both sold off dramatically. The NASDAQ got crushed.

And the little brother Russell 2000 had a historic day, gapping up at the open and closing at its highs for the day.

Again, the broad market got hammered but advancers hammered decliners by almost six to one, a number we have not seen this year, not even close, and all of it came on soaring volume.

Our take? Well, first of all, we now doubt that we have any business analyzing the stock market, or anything else, for that matter.

But it does appear that investors and traders are rotating out of the Magnificent Seven stocks, NVIDIA, Apple, Amazon, Google, Facebook, Tesla and Microsoft, all of which fell dramatically on Thursday, and into small caps, which, have lagged throughout most of this rally.

This is a sign of a healthy market, if not a not an indictment of a podcast host’s skill at prognostication.

Stock Market Report

Weirdness returns on Wall Street as the small caps appear to assume the mantle of market leadership.

• The Dow Jones Industrials managed a less than one-tenth of one percent gain, just thirty-two points and closed at 39,754.
• Not so much the S&P 500. It was off nine-tenths of a percent, and closed at 5,585, down forty-nine points.
• The NASDAQ Composite got crushed. It was down almost two percent. YIKES! Over 364 points and closed at 18,283.
• The small caps were in a whole different reality on Thursday. The Russell 2000 was up 3.57%, that’s the second highest percentage gain in its history, and it closed at 2,125, a gain of seventy-three points.

Bond Market Report

Rates continued their downward trajectory, after the release of the better-than-expected inflation data, and the 2-yr/20-yr yield curve seems to have righted itself.

• The 2-year treasury closed with a yield of 4.513%. That’s down twelve basis points.
• The 20-year was off six ticks and closed at 4.518%.

Oil, Gold, and Bitcoin

• Oil was up again. It gained $0.52 on Thursday and a barrel now changes hands at $82.62.
• Rates were sharply lower so gold must be sharply higher, and it was. Up, $41.40 and a troy ounce will now set you back $2,419.80. That’s a new all-time high for gold and its first close above $2,400.
• Bitcoin was off a minuscule $6.35 and at 4:00 PM ET stood at $57,431.53.

The Next Big Problem: Deflation?

The big news for the day was the better-than-expected Consumer Price Index. Month over month inflation at the consumer level was actually down 0.10%. Core CPI was up but came in better than expected at positive 0.10%. This is very good news indeed given the trend in inflation data in the last two or three months and clears the way for rate cuts from the Federal Reserve, sooner as opposed to later.

Initial and Continuing Jobless claims likewise came in better than expected.

And we also got the release of some second-quarter earnings. A mixed picture on the Giant Quote Machine, mostly green numbers but it is early yet.

Today, we get the rollout of the Producer Price Index complex as well as the Michigan Consumer Sentiment surveys, and whatever fallout there may be from yesterday’s wild session.

We will do what we do but you don’t have a choice. You’ve got to keep it right here on the Buzz.