The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
SpaceX and oil
SpaceX isn’t in the S&P 500 but it is a mega cap and it is part of the AI investment universe. It beat expectations last night and then some. The yield curve was about flat this morning, as was crude so SpaceX was the only major story. Investment narratives drew much from the SPCX results and shareholder reaction. SPCX traded up 7-12% in the first hour of the session. The S&P, led by the Mag 7, climbed consistently into the afternoon, topping out around +58 points. That’s a meaningful increase. But then things changed. Crude started climbing sharply at 2:45 PM. Stocks and bonds reacted shortly thereafter. Headlines started breaking about concerns of, and preparations for, renewed military action in the US/Iran conflict. The S&P gave up half its peak intraday gains in 15 minutes. Markets recovered some after the initial reaction and the index finished up significantly.
It does seem that investors were not only waiting for the mega cap tech results, but that they also were rightly optimistic about them. The rest of the reporting stocks in the S&P are not materially affecting the overall equity market sentiment. This earnings season is all about the biggest tech names and everything else, as far as the broader market is concerned, is a footnote.
It doesn’t make me feel good that the market is in this current state of mega cap tech fixation. That said, it makes all the sense in the world. The S&P is dominated by the market cap of those stocks. Over half the market cap of the index is comprised of two dozen stocks. Most of the earnings growth of the index is forecasted from the mega cap tech names. It is not to be liked, or disliked. It is what it is.
So this is a mega cap tech stock market. We’ve suspected it for a while but now I think it’s official. The next major catalysts of note will be Meta and Tesla results tonight.
See you tomorrow.
-Mike
Visdom Market Commentary
IMPORTANT INFORMATION
This is general educational information and market commentary and is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.
All market and economic data herein is as of the date hereof and sourced from Bloomberg unless otherwise stated. The information is subject to change without notice and we have no obligation to update you.
This general market commentary is intended for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The views and opinions expressed constitute the author(s) judgment based on current market conditions, are subject to change without notice, and may differ from those expressed by other employees of Visdom Investment Group LLC ("Visdom") and Visdom. Past performance and any forward-looking statements are not guarantees of future results. It is not possible to invest directly in an index.
We believe the information contained in this material to be reliable and have sought to take reasonable care in its preparation; however, we do not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. Any securities referenced are shown for illustrative purposes only, and are not intended as a recommendation or endorsement by Visdom or by the author(s) in this context. The information presented is not intended to be making value judgments on the preferred outcome of any government decision. This information does not constitute Visdom research, nor should it be considered a recommendation of a particular investment strategy or an offer or solicitation for the purchase or sale of any financial instrument. Investing involves market risk, including the possible loss of principal. You should speak to your financial advisor before making any investment decisions. Visdom and its affiliates do not provide legal, tax or account advice so you should seek professional guidance if you have questions.
