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“Perfection is a theory.” – Mikhail Baryshnikov

Morning stock market summary

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It’s been a quiet overnight session in terms of US-centric news, but European stocks have rallied to close out the first half as inflation data for the Eurozone was lower than expected. Headline CPI dropped from 6.1% down to 5.5% on a y/y basis, while core ticked up to 5.4% from 5.3%.  Both reports, however, were lower than expected.

The only data on the calendar today is Personal Income, Personal Spending, and PCE inflation data at 8:30. Then at 10 AM, we’ll get the final reading of consumer sentiment from the University of Michigan. Personal Income came in at 0.4% versus forecasts for a gain of 0.3%.  Personal Spending was weaker than expected rising just 0.1% versus forecasts for an increase of 0.2%.  Headline PCE was right in line with forecasts at 3.8% while Core PCE rose 4.6% which was slightly below the 4.7% forecast.

With the Nasdaq having the third-best first half in its history, it has been as close to a perfect year as one could imagine for the index.  The only two years that were better were 1975 (45.5%) and 1983 (37.1%), and with the Nasdaq up 29.9% heading into today, those two years are out of reach.  Similarly, the next closest year behind this year is 1991, and back then the Nasdaq was up 27.3% in the first half.  Therefore, unless the Nasdaq falls over 2.5% today, its ranking in the third spot seems safe.  If this were the NFL, we’d be sitting Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), (AMZN), Tesla (TSLA), Nvidia (NVDA), and Meta (META) today. Although AAPL may just get the start so it could cross the $3 trillion threshold.

It has also been a steady year for the Nasdaq as well.  So far this year, the maximum peak-to-trough decline for the index has been 8.7%.  That doesn’t sound too benign, but it’s well below the 12.5% first-half average dating back to 1972.  It’s also the smallest first-half decline since 2017 when it fell just 2.9% in the first half. Looking back throughout the history of the Nasdaq, while years with sub-10% drawdowns in the first half haven’t been very common in the years since 2000 (just 8 in 24 years), prior to that they were much more common with 17 in 28 years.

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