Strange But True
The Going Is Getting A Little Weird.
Second-quarter GDP came in hot and weekly jobless claims came in cold Thursday morning, and that’s exactly the combination you want to see, unless you’re short and/or a permabear.Futures for the major indexes flattened after the data broke at 8:30 a.m. ET, settling down from some up-and-down action, and opened that way.
The Russell 2000 $RUT poised for a nice open, setting up for a bounce-back from Wednesday’s 2-percent-plus decline, and its initial readings were positive too.
Investors, traders, and speculators are pricing out the fear induced by Bill Dudley’s assertion that it risked recession if the Federal Open Market Committee didn’t trim the federal funds target range at its meeting next week.
Other themes quickly manifested, though, as the Nasdaq Composite $CCMP turned negative and was down 1.57 percent 45 minutes into the session, and the S&P 500 $SPX was off 0.54 percent.
The Dow Jones Industrial Average $DJIA was up 0.43 percent, the RUT 0.81 percent.
And that basic framework held all the way through to the close.
Meanwhile, the CBOE Volatility Index $VIX is spiking.
The so-called “fear gauge” was up more than 4 percent to nearly 19 early Thursday, breaking out of a long sojourn in the 12s.
Volatility spikes like this are good for short-term traders as well as investors and speculators looking to take advantage of pricing mistakes.
There’s a lot of weirdness happening right now, in markets and elsewhere.
And it’s not just “narrative” stuff.
According to technical analysis software provider Optuma, even though the SPX was down 2 percent on Wednesday, 165 stocks closed higher.
That is “by far” the most advancing stocks on a 2 percent down day over the last 10 years. The next highest was 101 at the March 2020 COVID low.
And 72 percent of SPX stocks and eight of the 11 sectors beat the index. The Technology Select SPDR Fund $XLK and the Consumer Discretionary Select Sector SPDR Fund $XLY had their worst days since September 2022.
This is particularly fascinating.
Based on data culled from the Russell 3000, which includes the 3,000 biggest publicly traded US companies, we’re still seeing more new highs over various time frames than new lows.
As strange as everything seems, it’s fair to say this is normal bull market behavior.
A lot of the great rotation into small-caps is about the expected benefits that’ll accrue to them when the Fed finally begins its policy-easing process in earnest.
So let’s see what Personal Consumption Expenditure Price Index data for June say about inflation.
The FactSet consensus forecast for headline PCE is a rise of 0.8 percent month over month and 2.5 percent year over year. It was flat in May on a monthly basis.
Core PCE – which removes food and energy from the equation because of their volatility – will print at 0.10 percent on a monthly basis and 2.5 percent on an annual basis.
We’ll get the official numbers at 8:30 a.m.
