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“When people talk, listen completely. Most people never listen.” – Ernest Hemmingway
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It’s a slow news morning in financial markets, and that’s reflected in the futures where both the S&P 500 and Dow are just modestly positive. Nasdaq futures are more firmly in positive territory, but that’s just because that index got slammed yesterday declining more than 2%. In overnight international economic data, the most notable report was probably Japan’s weaker-than-expected CPI print. In Europe, UK Retail Sales were stronger than expected. Earnings season started to pick up the pace this week, but it’s all been a dress rehearsal for next week when Alphabet (GOOGL), Amazon.com (AMZN), Meta (META), and Microsoft (MSFT) – four companies representing 15% of the S&P 500’s market cap- will all report. And don’t forget about the Fed meeting either!
With Dow futures essentially unchanged heading into the opening bell, it will be a coin flip as to whether that index can extend its current streak of nine straight daily gains to double-digits. Whether or not the streak goes on, it will be the longest winning streak for the DJIA since 2017. If the streak ends today, it will be the longest streak since September 2017, and if it continues, it will be the longest streak since August 2017. You may recall that 2017 was a good year for US stocks as the Dow rallied over 25% with little in the way of downside volatility. That is reflected in the fact that there were three different streaks during the year where the DJIA was up for at least nine straight days with the longest being 12 trading days in February 2017. The only other year with three or more streaks of nine straight daily gains was 1955 when there were four.
In total, since 1953, which is the first full year where the NYSE had a five trading day week, there have now been 27 different streaks where the DJIA posted daily gains for at least nine trading days. In the 26 prior streaks, the Dow’s average and median performance in the month after the ninth positive day in a row was a gain of 0.8% with gains just barely more than half of the time. Performance over the following three, six, and twelve months, however, was much more consistent to the upside. Six and twelve months later, for example, the Dow’s median performance was gains of 5.3% and 8.8%, respectively, with positive returns over 80% of the time. Extended winning streaks like the Dow is in the middle of right now, don’t usually occur during bear markets.
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