July 22, 2024
By the looks of the way equity futures are trading this morning (+.50% to +1.0%, broadly speaking), last week’s stock-market gyrations suddenly seem all but forgotten. On the week last week, the CBOE Volatility Index (VIX) moved up to a three-month high as stocks sold off, driven by overbought technicals, a global IT outage, and a widely swinging sense of political uncertainty. On the week, the S&P 500 Index was down -1.97%, NASDAQ -3.65%, Russell 2000 +1.69, International Developed Mkts -2.39%, and Emerging Mkts -2.95%. It was a broad-based 3-day decline following new highs on the S&P on Tuesday. Is this the beginning of another correction like we had in April (the last time the VIX spiked higher)? Probably not (yet).
I suspect earnings are going to replace politics in terms of market focus. Earnings season kicks into high gear this week; especially important are two members of the Mega Caps (Alphabet (GOOG) and Tesla (TSLA)), slated to report earnings tomorrow. Mega caps have delivered almost all of the earnings growth over the past two years, while small caps have delivered none. Given the recent rotation back and forth, there is a lot of pressure on the mega caps to deliver again this earnings season. I’m guessing the market will get by on what they deliver in the coming weeks. If not, the correction or worse that I’m not expecting until the fall will be here sooner than that.
Be well,
Mike
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