MARKET COMMENTARY
Last week was another strong one for equity markets, with the S&P 500 extending its winning streak to eight consecutive weeks, its longest run since 2023, closing Friday at 7,473 after briefly trading above 7,500 earlier in the week, while the Dow climbed 2.1% to a record close of 50,580, marking its third weekly gain in four weeks. Coming off the Memorial Day holiday yesterday, markets picked up right where they left off, with the S&P 500 and Nasdaq both pushing to fresh all-time highs at the open, led by a surge in semiconductor stocks. Micron alone rallied double digits on a UBS upgrade that pushed it above a $1 trillion market cap. The rally was further supported by a 5% drop in oil prices, with Brent falling below $95 a barrel, on growing optimism that a U.S.-Iran deal to reopen the Strait of Hormuz may be taking shape. Over the weekend, negotiations continued in Doha around a proposed phased memorandum of understanding involving a 60-day ceasefire and a framework for nuclear talks, though significant gaps remain around Iran's highly enriched uranium stockpile and disputed transit fees in the strait.
This morning's Consumer Confidence reading from the Conference Board came in at 93.1 for May, a 0.7-point dip from April that reflects a consumer still feeling cautious about the economy, their personal finances, and the job market. Elevated oil prices, lingering inflation, and uncertainty around the Iran conflict have all weighed on sentiment, and this reading suggests those pressures haven't fully eased despite the market's recent strength. We'll get another piece of the puzzle on Thursday when the Fed's preferred inflation gauge, the Personal Consumption Expenditures index, is released, with headline PCE expected to show a 3.8% year-over-year increase, well above the Fed's 2% target and the hottest reading since 2023. Together, these two reports will paint a clearer picture of whether the American consumer is feeling the pinch of higher prices or simply holding their breath for a resolution on the global stage.
One of the more interesting dynamics playing out right now is the mixed signals we are seeing across sectors depending on your time horizon. Over the last ten weeks, Technology has been building momentum and looks like one of the stronger areas of the market on a longer-term basis. But zoom into the last ten days, and that same sector appears to be losing steam, with money appearing to rotate toward more defensive and energy-related names in the short term. That kind of divergence makes it difficult to know where to deploy capital right now, as the longer-term trend still favors growth, but the near-term behavior of the market is telling a different story. Today's action adds another wrinkle to that picture, with semis ripping higher on the Micron move while energy names sell off alongside crude, suggesting the rotation story may be less clean than it appeared even a few sessions ago.
Economic Releases This Week
Monday: Happy Memorial Day
Tuesday: Consumer Confidence
Wednesday: None
Thursday: PCE Index, Initial Jobless Claims, Durable-Goods Orders, New Home Sales
Friday: None
Stories to Start the Week
Iran pursues deal that brings economic relief without handing Trump victory
Micron hits $1 trillion market cap for the first time as stock surges 18%
The first class of AI natives is graduating— Offices are getting ready
Pope Leo warns that artificial intelligence could be “new tower of babel”, cautions against AI in the hands of the few
Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques onthe current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score.
Trend & level both matter. For example, a name that moves from an 18 to a 16 would signal a strong level yet slight exhaustion in the trend.
Disclousure:
Investing involves risk, including the possible loss of principal and fluctuation of value. Past performance is no guarantee of future results.
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