It’s not volatility that’s gone through the roof, but rather complacency, which has now seen unheard of levels! The VIX index, which measures the volatility forecasted for the next 12 months, has recorded since the start of May, 13 of its 23 lowest closing levels in the index’s history. There’s nothing more to say: this is the quietest and most complacent market ever seen. As dour as a given development might be, the market simply doesn’t want to budge – and it seems like investors are willing to see almost everything in a positive light. Investors are still wearing them, green glasses.
Monetary tightening?! All that means is a strong economy. And weak economic figures? The Fed’s keeping rates low! Legislation grinding to a standstill? Less of a chance that Trump will spark a trade war. Even the earnings reports released after closing by Netflix (NFLX) which missed forecasts by a cent led the stock to soar almost 11% in late trading, investors preferring to give the company the benefit of the doubt after its revenue surged 32%, with online video subscriptions likewise seeing nice gains.
Wall Street stocks ended slightly changed with thin trading volumes yesterday, while gains in utility stocks (XLU) and consumer stocks (XLY) offset the losses in health stocks (XLV), earning news mercilessly separating the winners from the losers.
BlackRock (BLK) fell 3.1% after the world’s largest money management fund reported quarterly earnings that missed early forecasts.
Health stocks (XLV) lagged behind, investors voicing disappointment about another deferral of the vote on Trump’s revised health care bill. The health law serves for many investors as a litmus test of the Trump administration’s ability to execute other significant reforms like its large tax reform proposal and the huge infrastructure investment program. In the meantime, what investors see is ink wells drying up, legislation on reforms grinding to a halt.
Daily Summary: The Dow Jones recorded negligible losses of 0.04%, the S&P 500 ending off 0.01%, and the NASDAQ tacking on 0.03%.
One of the stocks standing out in yesterday’s trading was the electric appliance maker, Whirlpool (WHR), which rose 1.7% after receiving positive coverage from Barron’s, which noted that the stock could rise 35% in the event the company continues producing like results.
On the flipside, APRN tumbled 10.5% after reports that Amazon (AMZN) is likely to enter the ready-made food market after registering a trademark for its meal delivery service whose motto is “We do the prep. You be the chef.”
The electric carmaker, Tesla (TSLA), fell 2.5% after reports from Minnesota that a Model S accelerated suddenly, crashing and landing in a marsh and leaving 5 injured after the sedan’s autopilot system, which is supposed to become the nuts and bolts of the company’s future autonomous car, went haywire.
In the weakest trading day so far this year, only 5.16 billion shares traded hands on U.S. exchanges, compared to the 6.51 billion average over the last 20 trading days.
Tuesday: Goldman Sachs (GS) and Bank of America (BAC) will be among the large financial companies reporting today. The Economic Diary is rather slim, with little to show besides import and export figures.
GS, BAC, and the large drug company, Johnson & Johnson (JNJ) will all be releasing their quarterly earnings reports before opening, commanding players’ attention. It could very well be that the positive response accorded to the stock of Netflix (NFLX) after closing will radiate onto today’s trading on Wall Street. Other companies that will be reporting before opening include HOG, LMT, and UNH. After closing, IBM, CSX and UAL are expected to report.
One of the releases expected for today is import and export numbers at 8:30 N.Y. time, before the opening bell, while the NAHB contractor index will be released at 10:00.
It seems that the market is going to be focusing this earnings season on bonafide gauges of how the economy’s faring, and less on how the economy’s being supported externally. More than investors are thrilled about the low rate environment, the market now has to respond to the economy’s real performance. Nobody expects the Fed to hike rates next Wednesday – nor in September – and after Yellen’s addresses last week, even December’s doubtful.
We’re still at the very early stages of the Q2 earnings season. About 65 S&P 500 firms are expected to report this week, 3 large banks having kicked off the season last Friday.
Friday’s Hot Stocks: GS, JNJ, HOG, NFLX, UNH
Have a great trading day!
|Tuesday||10:00||NAHB Housing Market Index||67||Medium|
|Wednesday||10:30||Crude Oil Inventories||–||Low|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy
No.1 – LB
|Company Name||L Brands, Inc.|
|Sector||Services | Apparel Stores|