Lots of News, Little Movement

There was no question that the stock market liked what it saw in the May employment report on Friday, both in terms of the economic messaging and the policy messaging. In brief, the takeaway from the market’s vantage point was that the economy may not be destined for a hard landing and that the Fed may not be destined to raise rates again in June.

Consequently, the stock market fulfilled its destiny of having a big day. The Russell 2000 soared 3.6% and the Invesco S&P 500 Equal-Weight ETF (RSP) had a better showing (+2.2%) than the market-cap weighted S&P 500 (+1.5%).

As we start the new week, the question today is: what now?

The S&P 500, which was flirting with 4,100 about a week-and-a-half ago, is now testing resistance at 4,300 or the high seen last August. In turn, CNBC is teasing the point that a close above 4,292.438 would signify the end of the bear market. That’s a little over 10 points from where we closed Friday.

Thus far, there hasn’t been much carryover buying interest. To be fair, there hasn’t been any concerted selling interest either.

Currently, the S&P 500 futures are up one point and are trading in-line with fair value, the Nasdaq 100 futures are down 15 points and are trading 0.1% below fair value, and the Dow Jones Industrial Average futures are down 17 points and are trading fractionally below fair value.

There is a good bit of news in the mix (or soon to be):

• President Biden signed the debt ceiling bill into law on Saturday
• OPEC+ did not change its production targets, but Saudi Arabia said it will voluntarily cut its own production by one million barrels per day starting in July
• Apple (AAPL) is holding its Worldwide Developers Conference today, where it is expected to unveil a mixed reality headset
• Newswires are buzzing with press releases from the American Society of Clinical Oncology ASCO Annual Meeting taking place in Chicago
• The Port of Long Beach reportedly won’t be operating today due to labor issues
• The Wall Street Journal reports that large banks could face a 20% increase in capital requirements
• The May ISM Non-Manufacturing Index (Briefing.com consensus 52.3%; prior 51.9%) is slated for release at 10:00 a.m. ET

In some more specific company news, Palo Alto Networks (PANW) will be added to the S&P 500 prior to the open on June 20, replacing DISH Network (DISH), which is moving to the S&P 600; Circor (CIR) is being acquired by KKR (KKR) for $1.6 billion or $49.00 per share in cash; lawyers are attempting to work out a settlement in the 3M (MMM) “Forever Chemicals” trial, according to The Wall Street Journal; and Allstate (ALL) is going to stop offering home insurance policies in California due to climate conditions and building costs, according to The New York Times.

Looking elsewhere across markets, the 2-yr note yield is up four basis points to 4.55%, the 10-yr note yield is up five basis points to 3.75%, WTI crude futures are up 2.0% to $73.18/bbl, the U.S. Dollar Index is up 0.3% to 104.38, and the CBOE Volatility Index is up 3.6% to 15.12.

There are a lot of moving parts across the markets, and within the stock market, per usual. None of it, however, is registering as a meaningful broad market mover at this point. That may change, but the open, according to the equity futures market, will keep relatively close to Friday’s much higher closing levels.

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Originally Posted June 5, 2023 – Lots of news, little movement