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Markets Resume After Very Strong Friday Trade

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Monday, June 5th, 2023

We closed last week of trading with one of the biggest upswings all year so far: +701 points (+2.12%) on the Dow, +1.45% on the S&P 500 and another +1.07% on the still-hot Nasdaq, even after a big jobs report than morning might have suggested the Fed would need another interest rate hike mid-this month. But market participants aren’t biting on that; until further notice, they presume the Fed will pause on its June 14th report, either for good or to pause ahead of further data.

This week’s initial pre-market activity shows flat-to-down on the indices at this hour, with only the small-cap Russell 2000 dipping at all notably lower: -0.5%. The Dow and Nasdaq are -0.06% and -0.02%, respectively, with only the S&P staying in the green after a strong  +1.63% week last week. Year to date, we now see all four major indices in the green for the first time in weeks, with even the Dow now up +1.6%.

The Nasdaq, on the other hand, may begin to give investors pause after the big run-up in A.I.-related fervor over the past couple weeks — especially since NVIDIA’s NVDA blowout quarter sent that company’s market cap above $1 trillion for the first time ever. The tech-heavy index is up +33% since the first of the year, for what is shaping up to be the strongest first half to a calendar year since 1991 — back when George Bush, Sr. was still president and Nirvana was just releasing its first major-label record.

Q1 earnings season has wound down almost completely, though there are still some interesting names to take note of this week: Cracker Barrel CBRL reports tomorrow, Brown-Forman BF.B and Campbell Soup CPB Wednesday, and DocuSign (DOCU) and Signet SIG Thursday. It’s been an instructive earnings season — and one not so rife with existential crises as many had foreseen going into it — and, in many ways, shows many quite nimble firms dealing with the end of the extraordinary pandemic, which began now 3 1/2 years ago.

Today, after the opening bell, we’ll get new S&P PMI and ISM Services results for May: S&P’s number is expected to remain consistent at 55.1 while ISM is expected to tick up a bit to 52.3% from 51.9% previously. These numbers are also key in that they are above the 50-level indicating strength versus weakness, as opposed to last week’s S&P and ISM PMI Manufacturing, which came in below that 50-level on both prints.

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