The market opens sideways, stocks, bonds, and . The main thing that’s higher is .
In a repeat of a recent trend, the VIX jumped into the open, rising from high 17 to 19 in a matter of minutes. Then it pulls back half of the move, leaving it higher on the day and then drifting lower for the rest of the day to a minor difference day over day at the close. While it’s hard to explain, it certainly leaves investors cautious until a bottom is formed.
The lack of economic data due to the government shutdown has taken away info that has acted as catalysts the market often rallied around. It doesn’t appear that the shutdown is coming to a close anytime soon, with the primary benefit being the history of the Fed to lean dovish during a data blackout.
Earnings remain strong with a couple of notable exceptions: Netflix (NFLX) and AT&T (T). Netflix had a meet on the top and a big miss on the bottom, which the company blamed on a very large tax dispute with Brazil. The shares are down 9.1%, leaving them +26.7% for the year. AT&T had a small miss on the top and a meet on the bottom, though adding more subscribers than forecast. The shares are down 3% (+11% YTD). Texas Instruments (TXN) had a small miss on the bottom and a small beat on the top but warned of a slower-than-expected forecast. The shares are down 5.3% (-8.6% YTD) and took a bite out of semiconductor enthusiasm.
On the commodity front, gold, which had its worst day in years yesterday, opened up flat and has since dropped $50 to $4,050/oz. Silver is flat (-7.2% in a week, +8.6% in a month). Copper is flat at $5/oz. is up 2.5% to $58.65/bbl on the news that the planned meeting between Trump and Putin has been postponed. Natural gas has climbed to $3.50/mcf, up 17% in a week. Energy stocks are up on the day, but still down 2% in the last month. Crypto is under pressure again, with Bitcoin down to $107.9K in a reflection of risk-off sentiment.
are flat, near the lows for the year, as the Fed is expected to begin a series of quarter-point cuts starting this month. The US dollar index is also flat at 98.75.
As the trading day moves on, we’re seeing a rollover to the downside across the major indexes as the VIX moved back to 19. It appears to be led by the sell-off of more speculative situations, with momentum names down 1.3% and growth down 0.5%. The rare earth group is down, as are innovative datacenter power suppliers such as OKLO, a small form factor nuclear business with no revenues yet, down 13.7% though still up 469% YTD. It looks like mostly profit taking, with semiconductors down 1.5% but up 40.6% YTD. It’s a general increase in volatility, as the S&P bounced off 4,702 and quickly rose to 4,725 as the VIX dropped quickly to 18.5.
The trend remains positive with some of the froth selling off, adding to volatility, generally a good thing for market health. Tonight, we get the first of the Magnificent 7, Tesla (TSLA). While earnings are off to a good start, how megatech performs has an outsized impact on market trends due to its record weight in the indexes.