The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Bounce.
It should not surprise us that yesterday’s dip inspired today’s rally. Futures traded flat overnight and caught a bid once Europe began trading. S&P futures implied about +10 on the S&P as we approached the open. The index printed there but the gains didn’t hold and the S&P was trading down within 5 minutes. That weakness didn’t last as the market moved in and pushed the index into positive territory at 10 AM. The market never looked back and built on the upward momentum throughout the remainder of the session. Yields rose small and capital flow was a bit higher at 114%.
Nvidia recovered almost half of yesterday’s losses and the rest of the market drew courage as a result. The story being told is that the DeepSeek efficiency doesn’t change the future revenue path much and that, in fact, more companies will pursue their own models since it’s no longer prohibitively expensive. Hmmm. I don’t know how to handicap the DeepSeek news properly but the Street has a habit of spinning bad news into even *better* news when it is caught up in the hype of a high-flying tech stock.
Color me skeptical. We will have to wait and see but when a competitor shows the world how to do what you do for cheaper… it takes a lot of hutzpah to claim that it is actually good for the current market leader.
In the meantime, we will hear from the FOMC tomorrow (no rate change expected). The usual game of reading between the lines will be in effect. I don’t think the Fed is interested in talking the market up nor down so I think we’ll get a less-interesting-than-usual Fed day.
I think the earnings reports from Meta, Microsoft, and Tesla will matter much more. They all report after the close tomorrow so the broader market reaction will be delayed until Thursday.
See you tomorrow.
-Mike
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