Yesterday, there were upside explosions in the market indices as the DOW ended at a new record high of 21,711 with a 97 point rise. The hero was unstoppable BA which accounted for about two-thirds of the DOW’s gain following the company’s earnings report. The NASDAQ ended at its own best ever level at 6422 for a gain of 10 led by new records in AMZN and PCLN. The NASDAQ has now been higher for 13 out of the past 14 sessions and attained its 44th record high close of the year. Even the S&P 500’s tiny gain of 1 point provided an all-time high of 2478.
With the second half of today’s market session still to go, the DOW is currently ahead by 15, the S&P is down 8 and the NASDAQ has fallen 56 points.
With 34% of the S&P companies having reported, we are seeing gains of over 8% in profits. 78% of the companies have beaten their estimates in this area while 73% have outperformed their estimates on the revenue side that is ahead by 5%.
The Fed released the minutes of its recent meeting in which they said that they will begin the process of balance sheet normalization “relatively soon”. This should mean around the time of the September meeting at which time the $4.5 trillion in bond holdings will begin to be discarded. As a result of this thinking, bond yields declined a bit yesterday with the 10-year Treasury Note at 2.29%.
The VIX is at historically low levels…finally ending yesterday at 9.60 for a gain of .17. This seems strange considering that all three major indices ended at record highs. On the other hand, the low 9’s, which are historic in their own right, seem to be holding.
Donald M. Selkin
Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters and the Associated Press.