All Eyes on Jay Powell

In his Daily Market Notes report to investors, Louis Navellier wrote:

All Eyes on Jay Powell

Today is Fed Day. It’s Jay Powell‘s written statement and comments that everyone will be hanging onto. 

This morning, all the major indexes started modestly in the red with the exception of the Russell 2000, as investors pause making big moves until the likelihood that today will be the final increase of the year by the Fed comes into focus. Interest rates are slightly lower today but higher for the trailing week. Gold is slightly higher (lower on the week) and crude oil is slightly lower (higher on the week)  The US dollar is down slightly (higher on the week). The VIX is essentially flat at 13.9 (up on the week)

After 12 consecutive up days in a row, the Dow has broken a decades-long record and is up 5% on the month and 6.9% YTD, playing catch up with the other indexes.

Note that the Dow is no longer an industrial heavy index; the top 5 of the 30 names by weight, comprising over 28.7% of the Index, are now: UnitedHealth 9.5%, Goldman 6.6%, Microsoft 6.5%, Home Depot 6.1%, McDonald’s 5.4%. Apple, the biggest company in the market, is only 3.6%. Financial names in the Dow are over 20% of the weight. Index buyers should understand the components behind the symbol.

Deflating AI Enthusiasm

Notable earnings last night included Alphabet (NASDAQ:GOOG) with beats top and bottom and strong cloud results, the stock is up 5.7% today, up 45% YTD. Microsoft (NASDAQ:MSFT) also had beats top and bottom but gave a disappointing forecast as to the timing of AI earnings contribution, the stock is down 4.4% today, +40% YTD. The Microsoft AI disappointment has the risk of deflating the sky-high enthusiasm for AI, at least in the short term.

This morning saw Union Pacific (NYSE:UNP) had misses top and bottom but the stock is up 10% on the announcement of a new CEO, up 14.3% YTD. Boeing (NYSE:BA) had beats top and bottom, albeit still an earnings loss, but thanks to surging aircraft deliveries is up 4% (+14% YTD).

Coca-Cola (NYSE:KO) had beats top and bottom, is up less than 1% and flat YTD. AT&T (T) had a slight top line miss and a slight bottom line beat and is flat on the day, but down 21% YTD as wireless subscriber growth has slowed and they have a potentially expensive problem with legacy lead-wrapped wiring to clean up.

Tonight we get Meta, which is forecasted for strong sequential growth top and bottom. The results of the day will hinge on the Fed comments and will spill into further tea leaf reading of the comments for the rest of the week.

Overall earnings remain better than expected, though the Microsoft AI caution could take some steam out of the major AI rally that has fueled the strong 2nd quarter market move. 

Coffee Beans: Sealed with a Kiss

An Ontario, Canada couple ate spicy peppers and then locked lips for more than 15 minutes to break the Guinness World Record for the longest habanero pepper kiss. The couple set their goal at 15 minutes because they will be celebrating their 15th anniversary this year. Source: UPI. See the full story here.

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