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“When things go wrong, don’t go with them.” – Elvis Presley
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
We had the wrong kind of “turnaround Tuesday” yesterday. Equities opened positively and then sold off throughout the trading day as the better-than-expected ISM Services and higher-than-expected Prices Paid component pushed yields higher and stock prices lower. That weakness flowed into Asia overnight and Europe this morning where equities have been trading lower. The picture for today looks dicey again as yields continue to move higher. The 10-year yield is firmly above 4.7% and, in the UK, the 10-year yield has moved to its highest level since October 2008! There was just a brief respite in the selling of bonds as comments from Fed Governor Waller hit the tape where he said he supports rate cuts in 2025 provided the economy and inflation play out as expected, but it lasted less than a few minutes before yields were back near their highs of the day.
The ADP Employment report came in weaker than expected as total payrolls increased 122K versus forecasts for an increase of 136K. While weaker than expected, it was still a steady number and has helped to alleviate some of the pressure in bonds and stocks. Jobless claims also just hit the tape, and initial claims fell to 201K which was below forecasts while continuing claims came in higher than expected. Given the holidays, though, some of these claims numbers could be distorted.
Nowhere was yesterday’s negative reversal more pronounced than in Nvidia (NVDA). The stock opened at record highs and looked like it was going to breakout of its six-month trading range after Monday night’s keynote speech from CEO Jensen Huang. It quickly reversed lower throughout the session, though, and finished down by over 6% on the day and over 8% from its intraday high. As shown in the chart below, yesterday was the sixth time in the last year that NVDA hit an all-time high intraday but then sold off at least 4% during the trading day. While the first three are almost hard to notice given they occurred during steady uptrends for the stock, the last two marked short-term tops. While NVDA managed to stay above its 50-day moving average in yesterday’s decline, it closed closer to that level than any of the other prior reversals.
