The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
Feeling better.
The S&P is now positive for the week and investors are constructive on US equities again. Futures traded off about 30 points overnight but they caught a slow bid around 5 AM. The S&P opened down about 20 points dipped further to down 40 at 10 AM, then bounced quickly. The S&P went positive before noon and was well-bid until the close. Yields fell across the curve, with noteworthy drops from 10 years to 30. Today’s drop in yields checks a lot of boxes for the yield charters and bond bulls are starting to believe again
The tariff talk is on the back burner and investors are happy to refocus on the bull case for stocks. Alphabet beat on earnings but disappointed on revenues. The stock fell 7% today. While GOOG is a member of the Mag 7, its disappointing performance didn’t matter to broader market sentiment. The perception of the Mag 7 remains bulletproof.
I find this a bit odd because of the five Mag 7 stocks that have already reported, three fell afterward. Apple fell small, Microsoft fell almost 7%, and Alphabet fell about the same today. Those are some flies in the ointment with respect to the revered status the Mag 7 gets as market leaders.
The winners of the Mag 7 aren’t that amazing at this point either. Tesla went up 2.9% after they reported and Meta climbed 1%. That’s nice for the shareholders but is it enough to make up for the others? Is it enough to carry the whole market higher?
I’m not gee-whiz inspired by the Mag 7 this earnings season. I appear to be alone however. The broader market likes the earnings season and the narrative is that the outlook is rosy. With the narrative effectively set, the bulls are in charge and they are thinking about new all-time highs again.
Nonfarm payrolls (+170k est vs +256k prior) is the risk on the horizon. That prints Friday at 8:30 AM.
See you tomorrow.
-Mike
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