uploaded image

Tech Titans Propel Market to Record Highs Despite Lingering Inflation Concerns

By:JJ Kinahan

Debate rages over interest rates as Economic data spurs uncertainty in markets

  • Equities are soaring to new highs, driven by tech leaders despite lingering concern about inflation.

  • Debate over interest rates has ensued as economic data diverged, and it’s impacting market sentiment.

  • Financials are resilient amid economic optimism; sector rotation signals have been observed with rising bond and gold prices.

Equities have climbed to new heights yet again, marking another historic day in the market landscape. The S&P 500 surged by 1.12%, closely followed by the Nasdaq Composite, which boasted a remarkable gain of over 1.5%. Familiar names that have ben stalwarts of the market’s ascent over the past year are driving this upward momentum. Notably, Nvidia (NVDA) and Super Micro Computer (SMCI) saw their shares skyrocket by more than 7%. These gains defied expectations, persisting despite a sobering economic report highlighting the persistent challenge of high inflation.

Yesterday, the consumer price index (CPI) exceeded economists' projections, prompting voices like Chase CEO Jamie Dimon and Citidel CEO Ken Griffin to advocate for caution regarding Federal Reserve interest rate cuts. Their rationale emphasized the importance of avoiding premature rate adjustments, which might necessitate subsequent rate hikes.

Data due for release

Looking ahead, the imminent release of the producer price index (PPI) promises additional insight, with forecasts of a 0.2% month-over-month increase and a 2% year-over-year rise in Core PPI. Additionally, attention will be on February's retail sales figures, anticipated to climb by 0.5%. In the realm of retail, Dollar Tree (DLTR) had a disappointing earnings report, and its bleak outlook contrasted with better-than-expected same-store sales, albeit with a 1.5% decline in average tickets.

Amid the market buzz, notable attention was directed toward Boeing (BA) and several other airline stocks grappling with the repercussions of Boeing's safety concerns. Southwest Airlines (LUV) bore the brunt, suffering a 15% decline in its shares. Concurrently, Boeing itself experienced a 4% dip, accumulating a 29% loss for the year.

Beyond the spotlight of the market titans lies another compelling narrative: the resilience of financial stocks. While individual gains for entities like Goldman Sachs, (GS), JP Morgan (JPM) and Wells Fargo (WFC) may seem modest, the broader financial sector has exhibited remarkable strength. The Select Sectors SPDR Trust Financial Index has surged by 10% this year and an impressive 30% since October.

This buoyancy aligns with the robust economic data and cautionary remarks from industry figures like Dimon and Griffin. As expectations for rate cuts recede, financial stocks stand to benefit from higher interest rates. Should tomorrow's PPI and retail sales reports affirm continued economic vigor, the ascent of financial stocks may well persist.

Bonds and gold

Amid these market dynamics, attention is also drawn to the movements of bonds and gold, signaling potential shifts in sector preferences. Despite the market's euphoria, a closer examination reveals nuances. While indices surged, advancing volume and decliners were surprisingly balanced, suggesting a degree of concentration in yesterday's rally. This concentration risk underscores the importance of vigilance, even in the face of seemingly strong market performances.

Looking ahead, my focus remains on bonds, gold and volatility. With minimal news expected until tomorrow, the path of least resistance appears to be upward. Nonetheless, adherence to investment plans and long-term objectives remains paramount in navigating the dynamic landscape of the financial markets.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.