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AnonymousThursday’s Headlines
1. US markets mixed as tech stocks drag
2. ECB launches a new round of stimulus
3. US weekly jobless claims decline, but they remain sky high
4. Unemployment by race reveals massive inequality
5. Why Europe has a relatively low jobless rateDow 26,281.82 +11.93 (+0.05%)
S&P 3,112.35 −10.52 (-0.34%)
Nasdaq 9,615.81 −67.10 (-0.69%)
VIX 25.81 +0.15 (+0.58%)
Bitcoin $9,787.56 +$133.03 (+1.38%)
US 10-Yr Yield 0.82 +0.059 (+7.75%)Markets Today
U.S. markets ended the day mixed as the DJIA rallied at the close with financial stocks continuing to lead the charge. Tech stocks sold off again in what has been a recent rotation, and they have a tendency of bringing the entire market up or down with them, as they did today with the S&P 500 and Nasdaq both losing ground. Airline stocks were in extreme rally mode as American Airlines increased the capacity of planes it plans to fly next month.
U.S. weekly jobless claims continue to decline week-over-week, but 1.9 million Americans filed for first-time unemployment claims in the week that ended yesterday. Continuing claims have been stubbornly high, which means rehiring is very slow.
The ECB launched a new stimulus program today, but it left interest rates unchanged. Unemployment has been more manageable in most European countries as the different approaches to stemming the crisis become more apparent.
Meanwhile, in Las Vegas, where casinos reopened at midnight.
Headlines:
• The European Central Bank announced it will be expanding its Pandemic Emergency Purchase Programme (PEPP) by €600 billion to a total of €1,350 billion and kept interest rates unchanged.
• American airlines said flights would increase 74% in July month-over-month, signaling a faster return to air travel than expected. The busiest days next month will have about 4,000 flights, up from 2,300 in June, the company said.
• Costco’s net sales rose 7.5% in May year-over-year to $12.55 billion, it said yesterday. Comparable sales rose 5.4% and e-commerce comp sales were up 106.2% for this period. For the thirty-nine weeks ended May 31, net sales were up 7.7% and comparable sales were up 6.1%.
• Adidas says its Greater China business returned to revenue growth in May.
• Amazon is expanding its aircraft fleet as it sees phenomenal demand during the pandemic. The company yesterday announced it is leasing an additional 12 Boeing 767-300 converted cargo aircrafts from Air Transport Services Group (ATSG). They will join the 70 aircrafts currently in the fleet. Amazon Air is also opening three new Regional Air Hubs this year and in 2021.
• The U.S. Department of Labor issued important new guidance for 401k plan investment committees on June 3 that want to include private equity as a component of a target date fund (TDF) or other diversified investment fund offered within a 401k plan.
• Shares of Slack (WORK) are down 17% after-hours following the company’s earning results that showed a 50% rise in sales last quarter. Sales grew 49% in the prior quarter, and analysts may have been looking for more robust growth.Weekly Jobless Claims Trend Lower
Another 1.9 million Americans filed for first time unemployment insurance last week, the first week in ten with claims under 2 million. Continuing claims, those people out of work for several weeks, climbed to 21.5 million people, a 675,000 jump from last week. That’s almost 15% of the working population, and nearly three times higher than any of the most recent recessions.Tomorrow we’ll get the May nonfarm payrolls report, which will likely tell us that the U.S. unemployment rate is at 19% or higher, the highest since the Great Depression.
Unemployment Wave Impacted Black Workers Most
While job cuts hurt everyone, the degree of the layoffs has had a particularly hard impact on the black workforce. Even when unemployment was 3% just a few months ago, it was double that for black people in the workfoarce, who also earn, save, and invest less than other Americans. The rampant layoffs across industries, but particularly the service, administrative, and hospitality industries, where the largest percentage of black workers are employed, has led to more than half of that group out of work in the past three months, according to the Labor DeptAirline stocks took off today…
Shares of airline stocks, including American (36.5%), United (over 14.5%), and Delta (over 13%), are up following surging demand as global quarantining begins to ease. Cruise line stocks, such as Norwegian (over 8.5%) and Carnival (over 7%), have risen on investor optimism over the industry soon returning to normal.
——————————————————————————-The Nasdaq 100 index (NDX) fell .77% today even as oil and gold prices rose slightly. But the pattern created by the price action on the index is a bit of a warning sign. This does not bode well going into tomorrow’s NonFarm Payroll report.
The chart below reveals that the tech-heavy index, as tracked by Invesco’s Nasdaq 100 index ETF (QQQ), is running into resistance. Yesterday’s high price for this ETF matched the exact high previously recorded on February 19th. It recorded that price late in the session yesterday. Today’s high pushed a few cents higher in the first 90 minutes of trading, but sellers took over and the ETF closed lower on the day. This created a 3-day candlestick formation known as an Evening Star.
This pattern has a higher-than-average predictive quality, especially if the pattern occurs on previous resistance and is followed up by a lower opening on the next day after the formation completes. If tomorrow’s jobs news disappoints investors, that could easily play out and a multi-day downward trend could easily follow.
The Bottom Line
Stock market indexes paused today as the Nasdaq 100 hit resistance at its former high price. Oil and natural gas prices may be reaching a point of relative equilibrium, which could temporarily diminish the strength of oil’s upward move. Shares of GPS have been strongly bullish, but that may change after today’s double bad news (poor earnings news and a lawsuit from Simon Property Group). If not, the unusually strong optimism investors are showing will likely contribute to higher prices in weeks to come.“The slope of the Nasdaq’s 50-DMA is rising at a rate rarely seen in its history.”
“Following a record decline last week, continuing claims rose to 21.49 million”
“Fauci says it’s time to think about reopening schools – CNN”
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