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“Though a good deal is too strange to be believed, nothing is too strange to have happened.” – Thomas Hardy
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
While Dow futures point to a 0.45% decline at the open, futures on the S&P 500 and Nasdaq are down much less, indicating a decline of less than 0.2%…for now. Crude oil is down 1.5% but still above $90 per barrel, while the 10-year yield declines 5 bps to 4.43%. Gold prices are up over 1% while Bitcoin is down over 3% and back below $70 as traders increasingly lose patience with the crypto space in search of greener pastures.
It’s a quiet day for economic data today, with the 10 AM JOLTS being the only report on the calendar. We’ll also get May vehicle sales data from the major OEMs throughout the day.
Overnight in Asia, it was a mixed session with the Nikkei down 0.3% while Hong Kong and China both rallied. South Korea’s KOSPI experienced a marginal gain of 0.2%, which, relative to recent moves, seems like a decline!
In Europe, the tone is more positive as the STOXX 600 rallies 0.7%, led higher by Italy and Germany. May CPI for the Eurozone increased 3.2% y/y, which was right in line with expectations, while Core CPI was slightly ahead of consensus forecasts (2.5% vs 2.4%).
Since the market low at the end of March, the S&P 500 is up just under 20%, but as we are all aware, breadth has been narrow. The lion’s share of the gains has been in the Technology sector, which has rallied over 45%, and the only other sector outperforming the S&P 500 over that time is Communications Services, which is ahead of the index only just barely. The nine other sectors in the S&P 500 are all underperforming the index by a wide margin, including three – Energy, Utilities, and Consumer Staples – which are lower.
One way to illustrate the dominance of tech since the March low is in the performance of each S&P 500 component. Since the March 30 low, 38 of the top 50 performing stocks are from the Technology sector, including 23 of the top 25 and all of the top 13. It’s been Technology and everyone else.
Of the top performing stocks since 3/30, the tech stocks dominating the list have primarily been – you guessed it – semiconductor stocks, and more specifically memory stocks. Many of these names doubled or tripled in the span of just two months!
In yesterday’s trading, Technology was once again the top performing sector in the S&P 500 and one of just two sectors to trade higher. In looking at the top performing stocks yesterday, Technology stocks once again dominated the list, but it wasn’t semis. In fact, of the top 30 performing stocks in the S&P 1500 yesterday, not a single semiconductor stock made the list even though Technology was one of only two sectors to trade higher.
As shown in the list below, yesterday’s dominant group within the Technology sector was software stocks. Of the 30 top performing stocks, more than half were from the Software and Services Industry Group.
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