LATAM Airlines pilots in Chile to begin strike at midnight Wednesday
After yesterday’s huge rally (S&P +1.5%, NASDAQ +2.3%), stocks are giving some back today. Once again, the move is AI-related, where the Magnificent 7 is down 1.7% this morning after gaining 2.7% yesterday, led by NVIDIA being down 3% on the news that Softbank has sold its entire $5.8B NVIDIA position. Softbank has been a major investor in OpenAI and is very bullish on the AI theme. The move down of NVIDIA has taken semiconductors down 1.8%. NVIDIA had its best day since April yesterday, +5.7%.
On a positive note, the even-weighted S&P is up 0.3% this morning, while the market weight is down 0.3%, a much broader move to the upside. For the trailing week, the even weighted S&P is up 1.4% compared to the market weight +0.2%. This is a move in the right direction, given that LTM, the even-weight S&P is up only 2.2% and the market weight is up 13.5%, the biggest gap in decades.
With the banks closed for Veterans Day, U.S. Treasuries aren’t trading, though the futures market in the 10-year is showing a yield down 4 bps to 4.07%. It’s interesting to note that due to the sticky interest rates, along with record high price points, the Trump administration is working on offering a 50-year home loan, and now a 15-year car loan, to lower monthly payments. Trump has also talked about a $2,000 "tariff dividend" to be distributed to low and middle-income Americans.
On the commodity front, precious metals are essentially flat, crude oil is pushing back to $61/bbl and natural gas is up 3.4%. Interestingly, wholesale gasoline is back to $2/gallon, up 8.9% in a month after hitting a 4-year low just last month. Also interesting is that the energy sector is now up 6% in a month, outpaced only by tech at 6.2%. Crypto remains volatile despite apparent inroads in being offered by more brokerages and banks. Bitcoin hit $107.4K overnight only to slide to $103.4K this morning.
Last night, the Senate approved a bill that will end the historically long government shutdown and unlock additional funding through January 30th. It is being sent to the House of Representatives and is expected to pass before the end of the week. This will bring a deluge of economic data, giving more insight into what to expect from the Fed in December. Bets on a series of Fed cuts are higher today, but still well below where they were before Powell cautioned that a December cut was far from certain after the October quarter-point cut.
Overall, the trend remains positive. New highs by year-end are definitely on the table, especially if the Fed cuts in December and takes a more dovish stance.