This week started like last week ended, with choppy and random action and a narrow trading range in the indices. Stocks were able to shake off some early weakness, but the dip buyers moved like some of the geriatric drivers in Florida. There was little zip to the action but at least it was going in the right direction.
Breadth was negative and the indices slightly positive which sums up the excitement quite well.
One story that didn't receive much attention today was a tumble in bonds. Both the iShares 7-10 year Treasury Bond ETF (IEF) and the 20+ year Treasury Bond Fund ETF (TLT) suffered severe pressure on concerns that upcoming economic data, and the GDP in particular, are running 'hot'. GDP for the second quarter is likely to be over 4% and that number will raise concerns about the Fed hiking rates more aggressively and inflation.
Banks benefited as the yield curve steepened. Money center banks were the leaders today as most other equities ignored the fact that the 10-year was approaching the 3% level once again
The Alphabet (GOOGL) report is out and the stock is reacting well. Earnings of $11.75 were $2.05 ahead of estimates and revenues were up 25% over last year. It is remarkable that a company this size can generate revenue growth like a small-cap name. The stock is up about $60 on the news and that is likely to boost some of the other FAANG names as well. The Nasdaq 100 ETF (QQQ) is trading up 0.5% after hours following the news.
The market has not been able to generate any sustained momentum on some good earnings so far this quarter but Alphabet may create some positive sympathy. There are a number of other big names on the docket this week and this report will increase expectations.
Have a good evening. I'll see you tomorrow.
