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“Let chaos reign, then rein in chaos.” – Andy Grove
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The rally continues to roll this morning as the S&P 500 looks to gap up 0.50% at the open, while the Nasdaq is up nearly triple that amount on the back of strong earnings, specifically from Intel (INTC). There’s also been some positive news out of the Middle East on reports that both the US and Iran will return to the bargaining table. Along with higher stock prices comes lower oil prices as WTI crude trades down 1.5% to $94.45 after trading as high as $97 earlier. Gold prices are unchanged, and Bitcoin is up nearly 1%.
Overnight, Asia was mixed. The Nikkei finished the last session of the week with a gain of 1%, doubling its week-to-date gain, while South Korea was little changed, keeping its weekly gain at just over 4.5%. China was slightly lower on the session and finished the week up less than 1%.
In Europe, stocks are generally lower, sitting out the tech-fueled rally that US stocks are likely to see at the open. The STOXX 600 is down less than half a percent, but will finish the week down over 2% even as the S&P 500 looks to finish the week higher.
Getting back to the US, it’s a quiet day for economic data with Michigan Sentiment the only report on the calendar. Earlier this month, the flash reading came in at a record low. That’s noteworthy because if those preliminary levels hold, it would be the first time that this index ever hit a record low in the same month that the S&P 500 hit an all-time high. There seems to be a disconnect somewhere.
It’s time to dust off the 10,000 hats again, not for the Dow but the SOX. For the first time, the Philadelphia Semiconductor Index (SOX) closed above 10,000 yesterday, and this morning, the Transports of the 21st Century are on pace to trade another 2.8% higher. We’ve been discussing it a lot recently, so excuse us for beating a dead horse, but the SOX is now on pace to trade higher for a record 18 straight trading days. The only other streak that was anywhere nearly as long was in June 2014, when the index traded higher for 15 straight days.
Just as incredible as the 18-day winning streak is the magnitude of the gain during this streak. If the current gains hold through the end of the day, the SOX will have rallied 45% in the last 18 trading days. We’ll say that again, 45%! Even for a volatile index like the SOX, there has only been one other 18-day period in the index’s history when it gained more, and that was coming out of the dot-com crash lows in Q4 2002, when the index was 97% lower than it is now!
We mentioned the term “dead horse” above, and surprisingly, it’s been stocks that were considered left for dead driving most of the gains. For starters, during yesterday’s session, Texas Instruments (TXN) rallied 19.4% on the back of its Q1 earnings report. Since 1990, there has only been one other day when the stock rallied more, and that was in October 2000.
As mentioned above, today’s driver of the semis rally is Intel (INTC). After an earnings triple play yesterday, the stock is trading up over 26% in the pre-market, which would rank as the stock’s best day since at least 1990. While the old guard of semis has been rallying, the AI bellwether of the group, Nvidia (NVDA), continues to lag, at least relatively speaking. Since the 3/30 low for the SOX, NVDA is up “only” 20%, or less than half as much as the index, in which it is easily the largest component by market cap.
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