Things you need to know.
– Stocks struggle to hang on.
– Big Tech earnings this week.
– Oil breaks the trendline, gold steady and Bonds advance.
– Try the Seared Sea Scallops with Tomato Bruschetta
Stocks started the week – well weak. The Dow lost 50 pts, the S&P up 4 pts, the Nasdaq +12 pts the Russell lost 25 pts, the Transports – 25 pts while the Equal Weight S&P added 10 pts. All as investors, traders and algo’s prepare themselves for some BIG Tech earnings, think MSFT, META, AMZN & AAPL as well as the news from the FED.
While the S&P advanced (if you can call 5 pts an advance) the rotation from big to small continues and the earnings this week will be crucial to market psyche. Of the 11 S&P sectors – we saw strength in Utilities, Consumer Discretionary, Consumer Staples, Communications, Healthcare, Basic Materials, and Real Estate, Industrials, Tech, Financials, and Energy were all weaker.
As Keith Lerner – Co Chief Investment Officer at Truist said: “There is a lot going on and it makes it hard to make a big call ahead of all this.”
The question this week is: Will the events force the continuation of selling big tech and buying the smids? (Small and MidCaps). Look – investors have been selling big tech because they have priced them to perfection…. the big rally in the first half of the year have left many wondering whether or not those prices are justified – Will the companies disappoint?
Now here is how I see it…. Are these prices justified. Even the slightest sign of weakness will cause trader types and algo’s to hit the sell button – look at what they did to Google last week. They took it down 9% on top of the 6% going into the report…and what was the reason? Well the algo’s focused on one line item – YouTube revenues…Never mind that Google earned $10 billion in the QUARTER (the first time ever). Going into yesterday – Google was down 14% in 2 weeks…. taking it right back to the intermediate term trendline of $168. A level that should hold…but if it doesn’t then look for it to go to $160. We did see GOOG up 1.45% to end the day at $171. Stay tuned.
Bond price rose – the TLT + 0.5% and the TLH + 0.3%. Janet announced that she expects to borrow only $740 billion vs. the $846 billion estimated 3 months ago.
Oil continues to come under pressure – ending the day at $75.80. Down 9% off the July high of $83.50. Oil traders have discounted the Middle East crisis and supply is expected to outstrip demand come the 4th qtr. and into the new year. It has now broken its long term trendline at $76.72 – leaving it struggling for stability. We could now easily test the $72 – $74 range before finding stability.
Gold remains tight. It closed at $2425 and is up $8 today at $2433. It is waiting on the FED news…talk of lower rates will be supportive of gold. It remains in the $2400/$2500 trading range.
US futures are UP. Dow futures + 80, the S&P’s up 11, the Nasdaq up 38 while the Russell is up 10.
So far this morning. We’ve heard from SWK, JBLU, EPD, CNP, PFE, & MRK and they all beat! After the bell it is all about MSFT…so don’t leave your seat.
European markets are mostly higher…. UJ is down 0.2% while Italy is up 0.6%. 2nd Qtr. GDP across the zone came in at +0.3% vs. the expectation of +0.2%. 1ST QTR was confirmed at +0.3%. Investors in Europe are also awaiting the FED’s decision…Will it be 1 cut or 3 cuts?
The S&P closed at 5463 – up 4 pts.…. Stocks are fighting to hold the trendline at 5439. Remember – we are entering the seasonally week time of year – Aug – Oct ….so prepare yourself for more volatility ahead…. If you have more cash to put to work – be proactive….do your homework – because there are always opportunities…. but remember – there is no need to rush…. Leave it in the mm fund earning 5%….
Don’t forget – today starts the FED meeting…. – the announcement due out on Wednesday at 2 pm. While no rate change is expected – investors will be listening to what JJ says about the future. Currently the market is pricing in at least 2 cuts (if not 3). Remember – the Dot plot called for one cut – so let’s see what he says.
From an investment perspective – continue to focus on the long game…. Remember – having a plan and staying focused is key for a long-term investor… Give me a call to discuss.
Take good care.
kpolcari@slatestone.com
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.
Kenny Polcari is the Chief Market Strategist for SlateStone Wealth. Neither Kenny nor the partners of SlateStone Wealth are compensated in any manner by the issuers of any securities mentioned in the publication.
Seared Sea Scallops w/Tomato Bruschetta
Ingredients: Sea Scallops, Dried Porcini Powder, Butter, s&p,
For the Bruschetta: Ripe, Plum Tomatoes, Red Onion, Garlic, Peeled and Sliced, Olive Oil, s&p & dried porcini powder.
Make the bruschetta and let it sit. Dice the tomatoes and place in a bowl. Add the sliced garlic – maybe 2 cloves and some diced red onion, olive oil and then season with s&p. Mix well and set aside.
Rinse and pat the scallops dry with a paper towel. Now – sprinkle the scallops with the dried Porcini powder on both sides.
In a heavy frying pan – heat the butter – add a drop of oil.
When it sizzles Add the scallops – maybe 4 at a time – if you add to many – they will cool the pan and not sear properly. Sear on med high heat for about 3 minutes on each side. The scallops will have a light, crisp outer crust. – Remove and place on a plate – (Cover with tin foil to keep warm) and repeat the process until finished – placing 4 scallops on each plate.
Once you sear them all finish by spooning a bit of the bruschetta over the scallops and serve immediately. Serve with your favorite white wine. A simple – yet elegant dish.
Buon Appetito.
