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“Restlessness is a fickle catalyst; it can drive you to achieve or it can coax your demise” – Slash
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 deals are starting to come in. Last night, President Trump announced a trade deal with Japan, which will set tariffs on imports from the country into the US at 15% (more details in today’s Morning Lineup). Futures are higher in response, with the biggest gains coming in the Dow while Nasdaq futures are just marginally higher.
Asian stocks surged in response to the news, with the Nikkei rising over 3% while other markets in the region saw broad gains. Japanese automakers have been the biggest winners with gains of over 10%. The positive sentiment from the trade deal with Japan has seeped into European trading as the STOXX 600 is up about 1%
Yesterday was a strange day for the market. While the S&P 500 finished the day with a fractional gain of 0.06%, four sectors traded up more than 1% on the day, and nine of eleven sectors finished the day higher. The only two sectors to finish lower on the day were Technology (-1.1%) and Communication Services (-0.3%). As another example, while the S&P 500 was barely up, the equal-weighted index was up over 1%. You don’t see that very often!
Given the strong breadth at the sector level, individual stock breadth was also very positive as the S&P 500’s net advance/decline reading was +314 – the strongest since June 6th! Going back to 1990, it was just the ninth time that the S&P 500 had a daily breadth reading of +300 or more on a day when the S&P 500 finished up by less than 0.5%. Yesterday was also the smallest gain of those nine prior days (and there has never been a day when net breadth was +300 and the S&P 500 finished down on the day).
Checking up on the performance of the S&P 500 market-cap-weighted index versus the performance of the equal weight index, even after yesterday’s improvement in the equal weight index, the cap-weighted index has handily outperformed over the last year. While the performance gap between the two indices is wider now than at any point in the last year, it’s interesting to note that as recently as early May, the equal-weight index was outperforming the cap-weighted index. It just goes to show that trends can be quick to change, especially in the market.
