US STOCKS: Late Equities Roundup: Holding Record Highs in SPX & DJIA
Aug-22 18:44
- Stocks holding at/near new record highs late Friday -- surging higher after Fed Chair Powell intimated shifting risk profiles may warrant adjusting policy as he delivered a speech on the economy in Jackson Hole, Wy this morning.
- Risk appetites gathered momentum as the US$ fell back near last week's 3W lows (BBDXY -10.71 at 1200.21), 10Y Treasury yields -.0720 at 4.2557%, while projected rate cuts into year end approximately -56bp priced in by the December 10 meeting.
- The broad based rally saw the DJIA make new all-time high of 45,691.18 - well past prior high of 45,073.63 on December 4, '24, the SPX eminis neared last week's record high of 6,508.75 (Aug 15), while the Nasdaq neared last week's record high of 21,803.75 (Aug 13). Currently, the DJIA trades up 821.87 points (1.84%) at 45608.3, S&P E-Minis up 95.75 points (1.5%) at 6484, Nasdaq up 412.9 points (2%) at 21513.02.
- Consumer Discretionary, Communication Services and Energy sectors led gainers in the second half. Leading discretionary sector shares included: Mohawk Industries +7.17%, Norwegian Cruise Line +6.74%, Caesars Entertainment +6.30%, Carnival +6.25%, PulteGroup +5.78% and Tesla +5.71%.
- Communications leaders included Alphabet +4.06%, Charter Communications +3.50%, Warner Bros Discovery +3.50%, Walt Disney +2.35% and Meta Platforms +2.10%. Oil & gas stocks buoyed the Energy sector with: Schlumberger +4.41%, APA Corp +4.29%, Phillips 66 +4.15% and Halliburton +4.02%.
- Conversely, Consumer Staples, Utilities and Health Care sectors continued to underperform in late trade, decliners included: The Kroger Co -2.49%, Monster Beverage -2.28%, Costco Wholesale -1.51%; NRG Energy -0.62%, Constellation Energy -0.48% and CenterPoint Energy -0.45%; while McKesson Corp -2.94%, Cencora -2.74% and Cardinal Health -2.32%.
- Reminder, Nvidia is expected to announce their latest earnings next Wednesday after the close.
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ECB: Morgan Stanley See ECB Cutting Quarterly After July Pause
Jul-23 18:41
- Morgan Stanley expect the ECB to keep rates on hold tomorrow, a long held view. “The rate normalization phase is over and any cut from here would need to clear a higher bar than before.”
- “The most immediate consequence is likely a shift around the timing of future changes to the monetary policy stance. Barring major shocks or data surprises, we see the ECB only changing rates at quarterly projections meetings." They see two more cuts this year, in September and December.
- “The ECB's June projections see solid growth in 2026-27. Headline inflation is moving back to target in 2027 after a temporary undershoot in 2026. Recent data prints show core inflation a touch lower in 2Q25 than the ECB forecast. And the appreciation of the euro is a downside risk for headline up to 2027.”
- “We still think the probability of further easing is underpriced by the market and we hold bullish duration structures. The uncertainty around the September meeting is the highest we have seen in a very long time: we construct an ECB uncertainty index and analyse the relationship that market uncertainty has with surprises at the next but one meeting.”
- They do however caution that they suspect Sintra comments have seen investors "overestimate the amount of ECB pushback to EUR strength we'll see". They note that "EUR/USD is in a tactical correction lower to 1.15 but we expect it to rebound further, aided by investor disappointment at the lack of pushback at this meeting – and perhaps even the September one.”
SOFR OPTIONS: BLOCK: Mar'26/Short Mar'26 SOFR Call Spread Steepener
Jul-23 18:32
- 5,000 SFRH6/0QH6 98.00 call spd, 2.0 net, short March bought over at 1421:45ET
USDJPY TECHS: Remains Above The 50-Day EMA
Jul-23 18:30
- RES 4: 151.21 High Mar 28
- RES 3: 150.49 High Apr 2
- RES 2: 149.38 50.0% retracement of the Jan 10 - Apr 22 bear leg
- RES 1: 147.95/149.18 High Jul 22 / 16 and the bull trigger
- PRICE: 146.39 @ 16:08 BST Jul 23
- SUP 1: 146.20 Low Jul 23
- SUP 2: 145.88 50-day EMA
- SUP 3: 144.23 Low Jul 7
- SUP 4: 142.68 Low Jul 1 and a key support
A bull cycle in USDJPY remains in place despite the latest pullback - a correction. Short-term pivot support to monitor is 145.88, the 50-day EMA. A clear break of this level would highlight a stronger reversal. Recent strength resulted in a breach of resistance at 148.03, the Jun 23 high, and a move through key resistance at 148.65, the May 12 high. The break strengthens the bullish theme and opens 149.38, a Fibonacci retracement.
