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“Sometimes people let the same problem make them miserable for years when they could just say, So what.” – Andy Warhol
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Paul Hickey appeared on CNBC’s Squawk on the Street yesterday to discuss markets and earnings season trends and prospects for the Consumer Discretionary sector. To view the segment, click on the image below.
Asian equities were mixed, with Japan falling 0.9% and South Korea dropping 4.6%, essentially erasing all of its recent gains. Hong Kong fell 1.5% while China bucked the trend and rallied 0.6%. In Europe, the tone is more positive. The STOXX 600 is rallying 0.4% while the UK is the only country benchmark down on the day as Spain and Italy gain 1%. Eurozone Retail Sales unexpectedly fell 0.3% versus forecasts of a gain of 0.1% while German Factory orders surged 3.1%.
In the US, it’s a busy day for economic data with Non-Farm Productivity, Unit Labor Costs, and Jobless Claims all at 8:30 Eastern, followed by Wholesale Inventories at 10 AM. In addition to the eco data, it’s a busy day for earnings after the close. Even though not a lot of ‘major’ companies will be reporting, there’s size in the number of reports.
By all accounts, the last five trading days have been a monster rally for US stocks. The snapshot from our Trend Analyzer below shows that every US equity index ETF in the group has rallied at least 2.5%, with most of them up over 5%. Leading the way higher, the Nasdaq 100 ETF (QQQ) has surged more than 8% from deep oversold levels to fractionally above its 50-day moving average.
Even though it’s the best-performing ETF in the group, though, QQQ is the only one not trading at overbought levels. In fact, most of them are at ‘extreme’ overbought levels (2+ standard deviations above its 50-DMA). It’s been a wild week with massive swings from oversold to overbought levels.
While it’s been a one-way move at the index level, there’s been quite a lot of bifurcation internally as six sector ETFs have rallied more than 1% while five have declined 1%. Tech and Consumer Discretionary have been the clear leaders while Energy, Consumer Staples, and Utilities have fallen 2% or more. The decline in Utilities has even put the sector back into oversold territory. While it’s been a strong market, the tide hasn’t lifted all boats.
With the Tech sector alone up over 10% in the last week, it’s not surprising to see the sector dominate the list of winners. Of the 22 stocks in the S&P 500 up over 20% in the last week, 17 are from the Technology sector, including each of the top ten! Outside of Tech, the five other stocks are comprised of four Industrials and one Consumer Discretionary, and even these are AI-adjacent.
Not all stocks have been winners, though, and the list below shows the nine stocks in the S&P 500 that are down at least 10% in the last five trading days. Topping the list of losers are two Health Care stocks – Insulet (PODD) and DaVita (DVA) and one tech stock (Fair Isaac).
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