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“Always do sober what you said you’d do drunk. That will teach you to keep your mouth shut.” – Ernest Hemingway
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
After a disappointing session to start the week where the major averages couldn’t hold onto earlier gains, futures are firmly higher ahead of the opening bell. The S&P 500 is on pace for a gain of 0.4% at the open while Nasdaq futures are up over 1.25%. There’s not a lot in the way of catalysts explaining the move, but earnings haven’t hurt. 3M (MMM) is up over 5% in the pre-market after reporting a triple-play, and General Motors (GM) is also up over 2% following a better-than-expected report.
Outside of equities, Treasury yields are little changed, crude oil is up over 1.5% to $84.60 in WTI, gold is up over 1%, and Bitcoin is up 2% and back above 66K for the first time in just over a month.
Asian stocks were mostly higher overnight as Japan and South Korea both rallied over 3%, while China’s Shanghai Composite jumped nearly 2%.
In Europe, the tone is also positive but more muted as the STOXX 600 is up 0.3%, led by Spain, which is up 0.8%, while France, Germany, and the UK all lag with gains of less than 0.2%. Economic sentiment for both the German and European economy came in significantly better than expected. While the report was positive, most of the surveys were probably completed before the escalation of tensions in the Middle East, so that could result in some giveback next month.
While Technology is leading the rally this morning, this year hasn’t been the summer of technology, at least not so far. Back in early June, investors couldn’t get enough of the sector as prices went parabolic into early June, staying consistently in overbought territory for nearly two months. Reality set in in early June, though, and the sector has gone from extremely overbought to the cusp of oversold and bordering correction territory.
While Technology has been a major drag on the market, other sectors have hung in there, and most are actually up. Besides the Technology sector’s 9.9% decline since the close on 6/2, no other sector is down even 3%. Financials and Health Care have been the two biggest beneficiaries of Tech’s weakness as both sectors are up over 9%, but the Real Estate, Consumer Staples, Utilities, and Industrials sectors are all up over 2%.
With Tech leading the way to the downside, its relative strength, as shown in our Daily Sector Snapshots report, has reversed much of the spring gains and has been steadily trending lower with lower highs and lower lows.
Like someone hitting a light switch, just as Tech started to falter in early June, both Financials and Health Care saw their relative strength turn on a dime from 52-week lows and start to turn higher. They’ve been the big beneficiaries of the weakness in the market’s largest sector, but if tech starts to rebound, will their fortunes reverse lower again?
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