Market Review 21st June 2024

INDEX:

1. S&P, Nasdaq & VIX Market Summary

2. Current & Upcoming Fed News/Economic Data

3. US Bonds and Treasury Yields

4. Futures, Crude Oil, Gold, & Other Commodities

5. Crypto: Bitcoin, Ethereum, and Alt Coins

6. Notable Earnings

S&P, Nasdaq & VIX Market Summary

• US Stock Performance:

  • US stocks moved slightly lower on Friday following a sharp reversal in tech stocks on Thursday.

  • The AI-fueled tech rally showed signs of exhaustion, with Nvidia experiencing a near 7% swing on Thursday, rising as much as 3% before finishing the day lower by 3.5%.

  • Other AI tech stocks such as Dell, Broadcom, and Super Micro Computer also saw declines of between 1% and 2%.

  • On Friday, Nvidia shares fell an additional 2% in early trading.

• Sectoral Divergence:

  • The S&P 500 and its biggest stocks are showing cracks and fissures. Despite the bullish chart, the market looks increasingly overbought.

  • Equity-only put-call ratios are quite low, with the standard ratio showing a potential sell signal while the weighted ratio remains in buy territory.

  • The VIX has remained subdued, maintaining a buy signal for stocks. However, a rise in VIX above its 200-day moving average could indicate trouble for the stock market.

Current & Upcoming Fed News/Economic Data

• Economic Data Releases:

  • Investors will focus on key economic data next week, including US retail sales for May, industrial production, jobless claims, and several speeches from top Federal Reserve officials.

  • A recent uptick in jobless claims to the highest level since last August, combined with a sharp downturn in housing starts, has raised recession concerns.

  • The May slowdown in housing starts, especially single-family homes, indicates rising inventory and reduced traffic, hinting at potential recessionary trends.

• Fed Policy Expectations:

  • The market's attention is turning to the personal consumption expenditure (PCE) inflation data for May, set to be released next Friday.

  • Expectations are for headline PCE inflation to drop from 2.7% year-over-year to 2.6%, and for core PCE inflation to decrease from 2.8% to 2.6%.

  • A lower-than-expected inflation reading could provide the Fed with the justification to cut interest rates, potentially more than once, in the latter half of the year.

US Bonds and Treasury Yields

• Weekly Rise in Treasury Yields:

  • The yield on the 2-year Treasury note rose 0.1 basis points to 4.728% on Friday, with a weekly gain of 4.5 basis points.

  • The yield on the 10-year Treasury note increased by 0.4 basis points to 4.256%, for a weekly advance of 4.4 basis points.

  • The yield on the 30-year Treasury bond rose 0.6 basis points to 4.397%, booking a 4.7 basis point gain for the week.

• Market Influences:

  • The S&P flash U.S. services index climbed to a 26-month high of 55.1 in June, indicating growth.

  • Data showed a decline in U.S. home sales for the third consecutive month, despite record high home prices.

  • The Conference Board's leading index for the U.S. economy declined for the third month in a row, but it does not currently signal a recession.

Futures, Crude Oil, Gold, & Other Commodities

• Oil and Gold:

  • West Texas Intermediate crude oil rose 0.26% to $81.50 a barrel, while Brent crude increased by 0.21% to $85.89 a barrel.

  • Gold edged higher by 0.30% to $2,375.50 per ounce.

• Economic Indicators:

  • The composite Purchasing Managers' Index (PMI) for June rose to 54.6, exceeding expectations and indicating expansion.

  • The Conference Board LEI declined by 0.5% in May, suggesting a potential economic slowdown but not necessarily a recession.

Notable Earnings

• Technology Sector:

  • Nvidia experienced a significant swing in trading, highlighting volatility in AI-driven stocks.

  • Dell, Broadcom, and Super Micro Computer also saw declines, reflecting broader sectoral pressures.

• Economic Data Impact:

  • With earnings season over, investors are shifting focus to economic data releases and their potential impact on market performance.

  • Retail sales, industrial production, jobless claims, and Fed speeches are key events to watch in the coming week.

Crypto: Bitcoin, Ethereum, and Other Coins

• Bitcoin Price Movement:

  • Bitcoin dropped 1.65% to $63,777, showing volatility as traders attempt to predict the next breakout or breakdown.

  • BTC opened at $64,858.97 and traded in a narrow range before setting a session low of $63,353.50.

• Market Analysis:

  • Crypto analysts are closely monitoring charts for signs of a breakout or further downside.

  • Some experts suggest that Bitcoin is close to bottoming out, while others caution that more downside could occur in the near term.

• Altcoin Performance:

  • Analysts predict that an altcoin season may follow Bitcoin's potential bottoming out, with significant moves expected in the crypto market.

References

• MarketWatch. (2024, June 21). The stock market is showing cracks, and the trading environment is murkier. Link

• MarketWatch. (2024, June 21). Treasury yields fall as investors look ahead to more data. Link

• Reuters. (2024, June 21). US wall street futures edge lower ahead of business survey data. Link

• Edward Jones. (2024, June 21). Daily market recap. Link

• Kitco. (2024, June 21). Bitcoin falls to $63,350 as crypto analysts look for a pivot. Link

• Yahoo Finance. (2024, June 21). Most active stocks. Link

Housing Slow Down, Stalling Stocks, and Bitcoin Woes