S&P 500 Posts Record High on Trump Speculation

The S&P 500 Index ($SPX) (SPY) today is up +0.72%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.62%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.94%.

Stock indexes today are pushing higher, with the S&P 500 and Dow Jones Industrials posting new record highs. Stocks are climbing today after Saturday’s attempted assassination of US presidential candidate Donald Trump galvanized support and sympathy for Trump and bolstered speculation he would win the election in November.  Stocks have support on anticipation that a Trump win would lead to tax cuts, tariffs, and looser regulations that could boost domestic corporate profits.  The markets look forward to comments from Fed Chair Powell later today, who will be interviewed at the Economic Club of Washington DC.

Today’s July Empire manufacturing survey general business conditions index fell -0.6 to -6.6, stronger than expectations of -7.6.

The price of Bitcoin (^BTCUSD) is up more than +9% today at a 1-1/2 week high on speculation that a win in November’s US presidential election by Donald Trump, who has cast himself as crypto-friendly, would be favorable for Bitcoin.

Weak economic news from China boosted concern that a slowdown in China’s economy will undercut global growth prospects, a negative factor for stocks.  China's Q2 GDP rose +0.6% q/q and +5.0% y/y, weaker than expectations of +0.9% q/q and +5.2% y/y.  Also, China's June retail sales rose +2.0% y/y, weaker than expectations of +3.4% y/y and the smallest increase in 14 months.  In addition, China's June new home prices fell -0.67% m/m, the thirteenth consecutive month home prices have declined.

The markets are discounting the chances for a -25 bp rate cut at 9% for the next FOMC meeting on July 30-31 and 91% for the following meeting on September 17-18.

Overseas stock markets today are mixed.  The Euro Stoxx 50 is down -1.07%.  China's Shanghai Composite closed up +0.09%.  Japan's Nikkei Stock 225 Index was closed today for the Marine Day holiday.

Interest Rates

September 10-year T-notes (ZNU24) today are down -7 ticks.  The 10-year T-note yield is up by +3.9 bp at 4.222%. Sep T-notes today are mildly lower on speculation about higher odds of Donald Trump winning the presidential election in November, which could boost inflation if he pursues tax cuts and a stimulative fiscal policy.  T-notes remained lower on today’s stronger-than-expected July Empire manufacturing survey report.  Today's strength in European government bonds is providing some carryover support to T-note prices.

European government bond yields today are moving lower.  The 10-year German bund yield is down -1.9 bp at 2.477%.  The 10-year UK gilt yield is down -0.3 bp at 4.105%.

Eurozone May industrial production fell -0.6% m/m, the biggest decline in 4 months but better than expectations of -0.7% m/m. 

Swaps are discounting the chances of a -25 bp rate cut by the ECB at 4% for the July 18 meeting and 80% for the September 12 meeting.

US Stock Movers

Apple (AAPL) is up more than +1% at a record high after Morgan Stanley named the stock as a “top pick” with a price target of $273. 

Financial stocks are climbing today on speculation a win by Donald Trump in November’s US presidential election will lead to reduced banking regulations.  As a result, Discover Financial Services (DFS), Capital One Financial (COF), and Synchrony Financial (SYF) are up more than +3%.  Also, JPMorgan Chase (JPM) and Wells Fargo (WFC) are up more than +2%.

Private prison companies and firearm-related companies are climbing as a failed assassination attempt on former President Trump over the weekend possibly boosted his chances of winning the presidential election in November.  As a result, GEO Group (GEO) and CoreCivic (CXW) are up more than +7%.  Also, Smith & Wesson Brands (SWBI) and Sturm Ruger & Co (RGR) are up more than +4%. 

Oil service companies are gaining today on speculation a Trump win in November’s presidential election will lead to reduced regulation in US oil drilling.  As a result, Schlumberger (SLB), Halliburton (HAL), APA Corp (APA), Baker Hughes (BKR), and Devon Energy (DVN) are up more than +3%.   

Cryptocurrency-related stocks are rallying today, with the price of Bitcoin (^BTCUSD) up more than +9% at a 1-1/2 week high on speculation that a win in November’s US presidential election by Donald Trump, who has cast himself as crypto-friendly, would be favorable for Bitcoin.  As a result, Coinbase Global (COIN), Marathon Digital Holdings (MARA), MicroStrategy (MSTR), and Riot Platforms (RIOT) are up more than +5%.

Goldman Sachs (GS) is up more than +1% after reporting Q2 net revenue of $12.73 billion, stronger than the consensus of $12.39 billion.

Humana (HUM) is up more than +1% after Truist Securities raised its price target on the stock to $400 from $355. 

PDD Holdings (PDD) is down more than -3% to lead losers in the Nasdaq 100 after China's June retail sales posted their smallest increase in 14 months.

Macy’s (M) is down more than -13% after it ended buyout discussions with Arkhouse Management and Brigade Capital Management.

Ulta Beauty (ULTA) is down more than -2% after Oppenheimer removed the stock from its “top pick” and said its “aggressive” promotions over the past weeks suggest ongoing challenges and potential risks to fiscal year 2024 guidance.

Baxter International (BAX) is down more than -3% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $30.

SBAC Communications Corp (SBAC) is down more than -2% after Wells Fargo Securities downgraded the stock to equal weight from overweight.

Trump Media & Technology Group (DJT) is up more than +33% after a failed assassination attempt over the weekend possibly increased the former US president’s chances of becoming president. 

Earnings Reports (7/15/2024)

BlackRock Inc (BLK), CG oncology Inc (CGON), Critical Metals Corp (CRML), CrossFirst Bankshares Inc (CFB), FB Financial Corp (FBK), Goldman Sachs Group Inc/The (GS), Guaranty Bancshares Inc/TX (GNTY), Hingham Institution For Saving (HIFS), Inhibrx Biosciences Inc (INBX), NET Lease Office Properties (NLOP), ServisFirst Bancshares Inc (SFBS), WaFd Inc (WAFD).

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