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Markets Today

  • S&P 500 (SPY): +0.19%
  • Nasdaq (QQQ): +1.74%
  • Dow Jones (DIA): -0.35%
  • Russell 2000 (IWM): +0.83%
  • Apple (AAPL): +1.91%
  • Tesla (TSLA): +2.59%
  • NVIDIA (NVDA): +3.04%
  • Amazon (AMZN): +3.60%
  • Shopify (SHOP): +8.28%
  • AMC Entertainment (AMC): -5.43%
  • Gamestop (GME): -2.41%
  • Exxon Mobil (XOM): -3.13%
  • Symbotic (SYM): +20.77%
  • Carvana (CVNA): +24.01%

Market Recap 

Following an extended weekend, US stocks rebounded from lows in the morning to finish solidly in the green, even as concerns over inflation and a potential persist and market participants look ahead to a week chock full of economic data. Energy prices also came under renewed pressure, with West Texas intermediate crude oil futures dipping below $100 per barrel and posting its largest decline since March at session lows. Treasury yields extended last week’s slide, and the benchmark 10-year yield fell below 2.9%.

The S&P 500 has so far posted its worst start to a year since 1970, and the Dow since 1962, with each of the major averages sliding by double-digit percentages year-to-date and over 20% since previous highs.  The U.S. economy has recently shown some signs of softening, with consumer confidence sliding and short-term expectations sinking to a near decade-low in addition to spending falling for the first time this year in May.

Concerns over inflation and the potential that higher prices may catalyze a recession have continued to weigh on equities all year. Federal Reserve officials continue to maintain a hawkish stance, suggesting further aggressive tightening is coming and Fed Chair Jerome Powell said in remarks last week that there was “no guarantee” the Fed could avoid a recession while attempting to fight inflation. While bounces like today are encouraging, remember one day does not make a trend. 

Sam Bullard, senior economist at Wells Fargo, said “Last week’s data performance, including a downward revision to Q1 GDP and evidence of sustained deceleration in consumer spending, suggests the U.S. economy is clearly losing momentum in the face of soaring inflation and tightening financial conditions.” 

urther critical economic data is due out this week, including FOMC meeting minutes on Wednesday and the June job report, which give us a clearer picture of the labor market amid higher prices. Economists are looking for 275,000 jobs to have come back in June, which would mark a sharp slowdown from the prior month’s 390,000. And the unemployment rate is expected to hold steady at 3.6%, for just a tick above February 2020’s pre-pandemic low of 3.5%. 

Bullard added, “The current hawkish tone should be pervasive throughout following the actions of a stepped-up 75 basis point federal funds rate hike and the explicit commitment to continue tightening aggressively until officials see ‘clear and convincing’ signs that inflation is coming down to target. We will be on the lookout for clues as to what inflation evidence officials are monitoring to help make that call.”

Last week, the Commerce Department reported that core personal expenditures – the Federal Reserve’s preferred measure of inflation – decelerated slightly in May but remained well above the Fed’s target. Core PCE,  the value of the goods and services purchased by people in the US, rose by 4.7% over last year compared to the 4.8% increase anticipated, according to Bloomberg data. Headline inflation, which includes energy and food price changes, also rose slightly less than expected, or at a 6.3% annual rate to match April’s pace. However, separate data showed real personal spending fell by a larger-than-expected 0.4% in May after a rise of 0.7% in April, suggesting consumers were pulling back on some spending with inflation at current levels. Here is the PCE report.

Highlights

  • Sales of Ford Motors F-150 Lightning sales jumped to about 1,800 units in June from about 460 units in May. It is a solid result. Ford just started delivering the electric pickup in recent weeks. Ford’s other EV, the Mustang Mach-E, underperformed, with only 1,957 deliveries compared to 5,179 delivered in March. 
  • The US automaker announced on Saturday that, between April and June, it has produced only 258,580 electric vehicles and delivered only 254,695 cars. By comparison, it was able to build 305,407 EVs and deliver 291,189 of them in the first three months of 2022. However, it claims that it produced more cars in June 2022 than any previous month in its history.
  • Twitter (TWTR) said it has filed a legal challenge against the Indian government’s orders that the social-media company block some users’ accounts and individual tweets in the country
  • Global oil prices could reach a “stratospheric” $380 a barrel if US and European penalties prompt Russia to inflict retaliatory crude-output cuts, JPMorgan analysts warned. 
  • Alphabet’s Google will pay $90 million to settle with app developers who argued Google used agreements with smartphone makers to shut them out of various revenue streams.
  •  According to Redfin, an estimated 6.1% of homes for sale during the four weeks leading to June 19, asked for a price drop – a record high as far back as the data goes, through the start of 2015.
  • Bridgewater Associates, the largest hedge fund in the world managed by Ray Dalio, posted an astonishing 32% return in the first half of 2022, vastly outperforming the SPY -20%. A big chunk of the performance came from a sizable short against ASML. 

“”The way to get started is to quit talking and begin doing.” –Walt Disney