August 14th Market Overview

In partnership with… - no one today lol.

Feel free to check out my book on swing trading :-)

Happy Wednesday everyone.

Green this deep into the week? I love it, lets see if the Q’s can close green by eod (probably flat)

Lets dig in…

Executive Summary

• The Dow gained over 200 points today, with consumer prices at a three-year low of 2.9% year-over-year.

• Kellanova surged following its $36 billion acquisition deal with Mars, while Mercury Systems saw a 19% increase after strong earnings.

• The market anticipates potential interest rate cuts from the Federal Reserve, dependent on forthcoming economic data.

• The CBOE Volatility Index (VIX) dipped below 18, indicating more stable investor sentiment.

Market Overview

We’re seeing a reversal from earlier monthly losses, with the Dow gaining approximately 267 points (+0.67%), S&P 500 up 0.35%, and Nasdaq slipping slightly by 0.13%. This positive reaction follows favorable inflation and jobs reports, reinforcing expectations for easing monetary policy.

Key Market Drivers

• Inflation Data: Today’s Consumer Price Index (CPI) report showed a 2.9% annual increase, setting a positive tone for potential rate reductions.

• Earnings Surprises: Companies like Mercury Systems exceeded expectations, showcasing healthy fundamentals despite recent volatility. Decent ER across the board.

• Regulatory News: Reports of a potential Alphabet breakup have created ripples in tech stocks, particularly impacting giants like Google.

Stock Spotlight

1. Kellanova (K) (+7.66%): Shares surged following the announcement of a $36 billion acquisition by Mars.

2. Mercury Systems (MRCY) (+19.15%): Posted $0.23 EPS against expectations for a loss, heading for its best day in 15 years.

3. Charles Schwab (SCHW) (+4.88%): Reported near doubling in new asset growth for July.

4. Victoria’s Secret (VSCO) (+16%): Stock soared after appointing a new CEO and providing better-than-expected preliminary Q2 results.

5. Flutter Entertainment (FLTR) (+9%): Increased full-year guidance after surpassing Q2 revenue expectations.

Other Magnificent 7 Updates

• Apple (AAPL): On track for a six-day winning streak, its longest since early July, despite slight declines today.

• Alphabet (GOOGL): Shares dipped 1.2% amid reports of potential regulatory breakup.

Other Notable Company News

• Brinker International (EAT) (-12%): Experienced a sharp decline following disappointing quarterly earnings and lower-than-expected profit forecast.

• LPL Financial (LPLA) (+9.6%): Improved performance with substantial gains following robust asset and account growth.

• Nu Holdings: The Brazil-based financial firm reported stronger-than-expected Q2 results, with shares rising 3.5% in extended trading.

Sector Watch

Bond Market

We’re seeing the bond market react positively to today’s economic data. The 10-year is trending lower on expectations of easing inflation pressures and potential rate cuts.

Policy Watch

Fed officials, including Atlanta’s Raphael Bostic, express optimism regarding recent economic indicators. We’re watching for potential interest rate reductions by year-end, depending on upcoming economic data. The Jackson Hole symposium next week could provide further insights into the Fed’s policy direction.

No sponsors today but feel free to check out my book on swing trading :-)

- JB

Note: This newsletter is intended for informational purposes only.