Market Update

June 13, 2024 at 1:30 p.m. EDT

by Michael P. Reinking, CFA - Sr. Market Strategist

DOW 38,571 (-141), S&P 500 5,422 (+1), Russell 2000 2,035 (-22), NYSE FANG+ 11,116 (+162), ICE Brent Crude $82.97/barrel (+$0.37), Gold $2,319/oz (-$36), Bitcoin ~66.7k (-1821)

  • Equities mixed
  • Inflation data better while claims move higher
  • Yields retesting recent lows
  • 8 of 11 S&P 500 sectors trading lower: Tech leads, Energy/Industrials underperform
  • Check out some of the recent ICE Data/Content:
MAC Desk Commentary:
Yesterday equity markets gapped higher after the better-than-expected CPI report but did give up some of those gains following the FOMC rate decision. As widely expected, the central bank left rates unchanged for the seventh consecutive meeting. However, there were some hawkish undertones in the Summary of Economic Projections with officials only projecting one rate cut this year down from three in March. Chair Powell delivered a pretty consistent message acknowledging the recent inflation data but highlighting it was only one data point. Broadly there wasn’t much of a change to the current higher for longer, data dependent policy stance. If you missed it last night check out the NYSE MAC Desk Fed Recap. During the press conference Treasury yields did drift higher reversing about half of the earlier move. Equity markets held the bulk of the gains, but the breadth did deteriorate most notably in the Russell 2k, the area of the market most impacted by that policy stance, which gave up half of the day’s gains to end higher by ~1.5%.
Global markets were mixed overnight as investors digested the news out of the US. Ahead of this morning’s economic data US futures were mixed with the S&P outperforming helped by continued strength in large cap tech companies.  Broadcom (+>10%) put up a beat and raise quarter and announced a 10:1 stock split the most recent positive AI data point completing the trifecta for the week, or the superfecta if you count the continued rally in Nvidia post-split. For the second consecutive day the inflation data came in better than expected while claims data moved higher. The data pushed Treasury yields lower retesting yesterday’s lows before the Fed meeting. US futures briefly spiked on the data but pulled back with major indices opening mixed and equity markets have been drifting lower since the open. As we head to print, the S&P 500 is essentially unchanged, the Dow is down 146pts to 38,566 (-0.4%), while the Russell 2k is down 25pts to 2,032 (-1.2%) reversing pretty much all of yesterday’s rally.
Looking at this morning’s data, PPI fell 0.2% below estimates for a +0.1% increase and down from 0.5% last month. Core-PPI also came in better than expected and was flat for the second consecutive month. Final demand services were also unchanged m/m, recall there was a big jump in portfolio management last month which accounted for 60% of the move. That reversed this month falling 1.8%. Claims data also moved higher with initial claims hitting 242k from 229k last week, the highest level since August. Continuing claims jumped to 1.82ml from 1.79ml, the highest level since January. This is still a pretty low number, but we are starting to see these metrics trend higher. One has to wonder if we had gotten this data last week whether the Fed’s SEP might have looked a little different. As I mentioned in my Recap last night the thing that was most striking to me were the economic forecasts which seemed to completely disregard the current slowing of growth and moderation in employment. Treasury yields have extended slightly to the downside following a strong 30yr auction at 1:00 currently down ~7bps across the curve with the long end starting to break below the recent lows.
Once again, the breadth is pretty poor with tech doing all the heavy lifting. 8 of 11 sectors are lower. Outside of tech REITs and Utilities are modestly higher being helped by the pull back in yields. On the downside energy and industrials are both down just under 1%. While most other sectors are clustered around the down 0.5% level.
Looking ahead to tomorrow the big catalyst overnight is the BOJ rate decision with growing speculation that the central bank could pare back bond purchases and set the stage for rate hikes. In the US import/export prices are released ahead of the open with the preliminary U of Mich Sentiment Survey released shortly thereafter. There are multiple ECB officials on the calendar, and I’d expect Fed officials to start coming out of the woodwork.
Pre-Market: ALLG, HURC, NATH
Sectors/Other Asset Classes:

  • US 2yr -8bps to 4.68%, 5yr -10bps to 4.22%, 10yr -8bps to 4.23%, 30yr -7bps to 4.40%
  • USD index: +$0.59 to $105.21
  • VIX: +0.23 to 12.27
Central Banks:
  • Nikkei suggests the BOJ could reduce bond purchases to 6T¥ from 5T¥
  • MSCI rejects plan to add EU Debt to government bond indices - Bloomberg
Economic Data:
  • US:
    • Initial Claims: 242k vs. 225k cons., prior 229k
    • Continuing Claims: 1.82ml vs. 1.794ml cons,. Prior 1.792ml
    • PPI: -0.2%/2.2% vs. 0.1%/2.5% cons,. Prior 0.5%/2.2%
  • Global
    • Australia Employment: 39.7k vs. 17.5k cons. Prior 37.4k
    • Australia Unemployment Rate: 4.0% vs. 4.1% cons,. Prior 4.1%
    • EU Industrial Production: -0.1%/-3.0% m.m/y.y vs. 0%/-1.8% cons,. Prior 0.5%/-1.2%

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