Monday was the first trading day of the month, a day which usually tends to end in the green. And that penchant for gains didn’t disappoint on Monday, the S&P 500 and the Dow ending up, the latter hitting a new intraday high, led by energy and banking stocks! Continued weakness in tech stocks pressed the NASDAQ down. The rotation that we saw last week continued into Monday’s movement –the day’s narrow trading presumably also contributing to that phenomenon; at the same time, we saw a significant divergence between the movement on the NASDAQ 100 (QQQ) which traded off 0.81% at the intraday low – and the Dow, which traded up as much as 0.88% and at a historic intraday high. We don’t have exact statistics about the frequency of this development, but it’s something rare to say the least!
The energy sector (XLE) rallied 2%, recording its best day in almost a month, led by the 2 powerhouses, Chevron (CVX) and Exxon-Mobil (XOM). Crude continued climbing, adding on another 1%, stretching its winning streak to 6 days, making it the commodity’s best rally in 5 years – after figures pointed to a tapering in the pace of U.S. crude production.
Financial stocks (XLF) soared 1.3%, the sector boasting gains in 6 of the last 7 trading days.
The NASDAQ dropped, the tech sector (XLK) continuing to struggle, ending off 0.9% on Monday after having dipped almost 3% last week.
Daily Summary: The Dow Jones rose 0.61%, the S&P 500 tacking on 0.23%. The NASDAQ fell 0.49%.
The economic figures released on Monday served to support the positive environment, factory activity showing a surge in June to its highest level in almost 3 years, a fact that pointed to Q2 economic growth accelerating into Q3. Also on the economic front, the manufacturing sector ISM registered a 57.8 point reading, besting May’s 54.9 point reading.
Another positive signal for the market could be found in the transportation index (IYT), which includes airline, train and parcel delivery stocks; the index is usually seen as a bellwether of economic activity. The IYT closed at a new high.
Trading volumes were constricted given that Monday was only a half day of trading leading up to July 4th, American Independence Day, U.S. markets closed yesterday for the festivities. About 3.77 billion shares traded hands on U.S. exchanges, far short of the 7.18 billion average over the last 20 trading days.
Wednesday: The Federal Reserve is likely to have an impact on today’s trading, traders returning today from Independence Day to the minutes from the central bank’s latest meeting which will be released at 14:00 N.Y. time. In brief, the minutes will provide an insight into the atmosphere that prevailed amongst bankers when they hiked rates in their latest meeting. It will be one of the reports we will get in the imminent future that will reveal what the Fed is expected to do in the second half of the year. On Friday, the official June employment report will be released, investors looking to see whether wage figures presage an uptick in inflation.
The market is at a loss as to whether the Fed will hike rates a third time this year; the consensus is that there’s a 50% chance of a September rate hike.
Besides the Fed minutes, today’s economic figures will feature factory orders at 10:00. Weekly crude inventory figures will be released tomorrow – instead of today – because of the shortened trading week.
Today’s Hot Stocks: None
Have a great trading day!
|Tuesday||–||4th of July|
Independence Day – Wall Street is Close
|Thursday||8:15||ADP Employment Change||185K||High|
|Thursday||11:00||Crude Oil Inventories||–||Low|
|MLHR||Herman Miller, Inc.||AMC||Wednesday|
|YUMC||Yum China Holdings, Inc.||AMC||Wednesday|
Today’s Picks – Day Trading!
New York Strategy Swing