Yesterday didn’t go well at all, but it didn’t stop the market momentum for long.
Fed Chairman Jerome Powell’s early comment yesterday that a December is “far from certain” took the down nearly 1% from its high for the day immediately. It recovered to flat by the end of the day, but it was probably the worst outcome we could have hoped for. US Treasury yields spiked; the 2-year jumped 11bps to 3.61%, the 10-year +7bps to 4.08%.
The Fed volatility was followed by disappointments in two of the three Magnificent 7 earnings reports, where had a good beat on the top but a huge miss on the bottom due to a $16B charge on a tax bill, and raised its total expense estimate forecast. The shares are down 10.2% today (+13% YTD). had solid beats top and bottom and a strong cloud business but said its investment in OpenAI hit income $3.1B. After hitting a new all-time high yesterday, the shares pulled back nearly 4% after the company said that AI spending will accelerate. The shares are down 2.1% today (+25.7% YTD). reported solid beats top and bottom, the top line a new record, and despite also saying they will boost AI spending, which were concerns for both Meta and Microsoft, the shares jumped to a new all-time high today of $290 (+42.1% YTD).
Today, all the major indexes opened in the red, but within the first hour, both the and Russell 2000 moved into the green, as did the even-weighted S&P. The Magnificent 7 is down 2.3%, with Meta now down 12.3% and down 4%. Alphabet is the only member in the green at +5.3%. The overall tech sector is down 0.9% but remains the leader for the trailing week at +3.6%, as well as the leader for the trailing month and YTD.
On the commodity front, is holding above $4K, is +1% and is -3.9%. is flat at $60.4/bbl, and is +2.1% to $3.9/mcf. The US dollar index has risen to 99.3 a 6-month high. Crypto is down 3.7% in a risk-off sentiment with Bitcoin at $108.3K.
As the trading day rolls on, we find the Dow at the high of the day at +344 points (+0.7%) and the Russell 2000 at +0.2%. The NASDAQ and Magnificent 7 are off their lows and trending higher, and the even-weighted S&P is at a high of +0.6% way up from opening down 0.4%. The VIX that topped at 17.1 has fallen to 16.5. Importantly, the bet on a Fed cut in December has jumped from 63% yesterday after the Fed meeting to 73%.
The market took a couple of major body blows yesterday and has taken very little damage. The trend remains positive, and if we get good news from and tonight, we should be back on track for a strong year-end.