Suddenly, fear creeps into the Fear & Greed gauge. However, there might be more trepidation about the transition as the rally baton is handed off to 493 stocks that have mostly watched the action over the last two years. But yesterday, large-cap growth and core names took it on the chin. 

What Could Be?

Yesterday, the much-maligned Real Estate (XLRE) Sector led the way, followed by Utilities (XLU), which now enjoy the benefits of being in the Artificial Intelligence (AI) conversation and the traditional foxhole during times of heightened concern. 

This year, the ‘Mag Seven’ was already losing some oomph, but it remains to be seen if there could be a sustained rally without these names leading the parade. 

Market Breadth 

Market breadth was impressive, especially on the New York Stock Exchange (NYSE), where advancers outnumbered decliners by almost a 3:1 ratio.  

Market Breadth	NYSE	NASDAQ
Advancers	2,077	2,489
Decliners	753	1,726
New Highs	69	69
New Lows	45	97
Up Volume	1.9 billion	3.9 billion
Down Volume	1.07 billion	2.04 billion

The NASDAQ Composite is a long way from a gut check.

After Close Fireworks

Yesterday, we issued an alert that we were closing out Dell Technologies (DELL) for a hefty profit. Emotions have been losing influence on the market, putting more onus on fundamentals.  

The thing about the AI revolution is that the hype is far ahead of reality for every stock except Nvidia (NVDA).

Dell came up a little short, and the shares were down 12% in after-hours trading. 

In the movie classic “Blazing Saddles” former NFL star Alex Karras played a character named Mongo, who knocked out a horse with a punch to the face in a famous scene. 

After the bell, software maker MongoDB (MDB) saw its shares hit the ground after posting financials.  The moral of this story is that super-hot story stocks can make monsters move in both directions. 

Today’s Session

This morning’s critical economic data came in as expected.  The pace of inflation from a year ago is lower, but still sideways and well above the Fed’s inflation target of 2.0%.

The standout for me is spending declined to +0.2% after back-to-back months of +0.7%.

The message from consumers.

It's clear we are spending money on essentials:

• Housing and electricity bills

• Healthcare

• Insurance

We are spending less, even adjusted for inflation:

• Transportation (see American Airlines stock this week)

• Furniture

• Recreational goods

Overall, the news has those hoping for rate cuts feeling better, but they need negative surprises to change the narrative, which is now one or two cuts.

The good news for investors is that earnings season is over, and we have data and reactions that will help inform us of our next moves. 

Comments

Congratulations Charles on the ten year milestone! Thank you for doing your part to keep the American dream alive and helping others to achieve it! Jack Lucas on 5/31/2024 9:16:19 AM

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