A live look at the stock market from right here on the banks of the Wando River!
Wednesday 6/5/19=DJIA +207 NASDAQ +48
Wednesday was another very good day for the markets. Jerome’s Powell’s promise of having our back on the economy has really lit a fire in the markets once again.
But first, here is a re-cap of Tuesday 500 point plus move in the DJIA:
- The three major U.S. stock averages started the day strong and didn’t look back, gaining strength as trade tensions with Mexico eased and Fed officials vowed to do what’s needed to keep the U.S. economic expansion going.
- The S&P 500, up 2.1% at 2,803.21, closed above 2,800 for the first session since May 28, and notched the biggest one-day jump since Jan. 4.
- Nasdaq powered ahead 2.7% and the Dow added 512 points, or 2.1%.
- Information technology(+3.2%) and financials (+2.6%) turned in the strongest performance, while real estate (-0.7%) was the only sector that ended the session down.
- Treasuries fell, with 10-year yield rising 5 basis points to 2.12%.
Here is what the two-day bounce looks like in a one-year chart of the DJIA:
This was the mood of the market as we prepared for Wednesday’s trading day:
- President Trump may finally get the rate cut he has been demanding as top Fed officials began warning this week that the global trade war may force them to respond.
- Chair Jerome Powell made a subtle move in that direction on Tuesday, dropping his standard reference to the Fed being “patient,” and said it is prepared to “act as appropriate to sustain the expansion” amid intensifying trade tensions.
- Futures are now pointing to modest opening gains in the U.S., up 0.3%, after the major indexes yesterday had their second-best day of 2019. The DJIA rose 512 points, while the S&P 500 jumped 2.1% and Nasdaq Composite surged 2.7%.
The first thing that the market got hit with was a terrible print on ADP jobs:
- May ADP Jobs Report: +27K vs. +175K consensus, 275K prior (unrevised).
This report stoked recession fears once again, but it also raised the probability of a rate cut by the FED at some point in time.
This report also set off yet another rally in the bond market.
- Only 27K private-sector jobs were added in the economy in May, according to ADP. That’s well shy of expectations for 175K, and April’s 271K gain.
- That 27K was also the weakest ADP print in nine years.
- Bonds slumped during yesterday’s big rally, but buyers have returned following the ADP report, sending the 10-year Treasury yield down a full five basis points to 2.08%.
- Short-term rate traders are busy pricing in Fed rate cuts, with the odds of a 25 basis point move in September now nearly 100%.
Just look at that bond market go!
In the meantime, the Cinco de Junio stand-off with Mexico continues:
Guacamole and salsa prices are definitely at risk.
- The U.S. and Mexico are scheduled to start official talks in Washington this afternoon after President Trump threatened to impose punitive tariffs on Mexican products on June 10.
- Where would the levies hit hardest? Mexico is the world’s biggest exporter of beer (BUD, STZ), selling $3.6B worth to the U.S. last year, along with $2B in avocados (CVGW, FDP) and $2B in tomatoes.
- Corporations are also speaking out. Chipotle (NYSE:CMG) estimated a $15M hit, but said it could cover that by raising burrito prices by around 5 cents, while auto parts maker Aptiv (NYSE:APTV) said a 5% tariff would cost the company $17M per month.
The latest from Apple regarding China:
- Apple (NASDAQ:AAPL) shares are up nearly 2% premarket after CEO Tim Cook told CBS News that he didn’t “anticipate” his company would be targeted by China should the ongoing trade war escalate further.
- “We’ve had a company in China for a long time. And so, there is a, I believe, a healthy level of respect for both sides,” he added.
- Cook also dismissed the idea that Apple was “too big” and took issue with suggestions from presidential candidate Elizabeth Warren that it had a monopoly position that would warrant action from either lawmakers or the DOJ.
Move over Tesla, more luxury EV’s are on the way:
- Another industry alliance has been formed to lower the costs of developing EVs as BMW (OTCPK:BMWYY) said it would develop its next-generation electric motors, transmission and power electronics with Jaguar Land Rover (NYSE:TTM).
- “We’ve proven we can build world beating electric cars but now we need to scale the technology to support,” said Nick Rogers, Jaguar Land Rover’s engineering director.
- Volkswagen (OTCPK:VWAGY) also announced a mega investment overnight, allocating €4B over the years to 2023 to digitalize its administration and production. 4,000 jobs in non-production units could be cut as a result of the digitalization.
Here comes Bernie! How many times will he mention the word “billionaires”?
- There’s likely to be some fireworks at Walmart’s (NYSE:WMT) annual shareholders meeting in Bentonville, Arkansas, as Bernie Sanders gatecrashes the “celebration” with calls to raise wages and and hourly associates to have a seat on the retailer’s board.
- Walmart currently pays an $11 minimum wage, but says its average hourly total compensation and benefits total more than $17.50 an hour.
- Shareholders will also vote on whether to strengthen Walmart’s sexual harassment policies and approve executives’ pay.
It’s a miracle:
- ReWalk Robotics (NASDAQ:RWLK) rockets 113% in after-hours trading after the U.S. Food and Drug Administration clears the company’s ReStore soft exo-suit for sale to rehabilitation centers across the U.S.
- The suit is intended for use in the treatment of stroke survivors with mobility challenges.
- Launch price is $28,900 with leasing options.
One of my Best Stocks reports earnings:
- Salesforce.com (NYSE:CRM): Q1 Non-GAAP EPS of $0.66 beats by $0.05; GAAP EPS of $0.22 beats by $0.10.
- Revenue of $3.74B (+24.3% Y/Y) beats by $50M.
- Shares +0.45%.
I remain long in my Premier Growth Portfolio. The stock has been a very consistent deliverer of alpha over the years.
Data from www.BestStocksNowApp.com
This next stock looks “terminal” to me. I have a small “short” position in my own personal account.
- GameStop (NYSE:GME) has slipped 8.9% after hours following a miss on its Q1 revenues, despite an unexpected profit in GAAP terms.
- And the company decided to eliminate its dividend, a move that it says will preserve about $157M in cash annually.
- Sales fell 13.3% globally (an 11.5% decline in constant currency), and comparable-store sales fell 10.3% with broad declines at home and abroad.