[Chart courtesy of MarketWatch.com]

1. Moving the markets

While the major indexes were shooting for a 3^rd winning day in a row, the session turned out to be sloppy one with only the Nasdaq closing in the green, while the Dow and S&P 500 danced around their respective unchanged lines. Both dove into the close and ended up with tiny losses.

So far, for the month of June only the S&P 500 and the Nasdaq are in the green having gained 0.9% and 3.8%, while the Dow remains in the red due to weakness in its Caterpillar and JPM components.

Small Caps were moderately higher, but Dallas Fed President Kaplan spoiled the party today with these hawkish remarks, as Zero Hedge pointed out:

The U.S. economy will likely meet the Federal Reserve’s threshold for tapering its asset purchases sooner than people think.

As we make substantial further progress, which I think will happen sooner than people expect — sooner rather than later — and we’re weathering the pandemic, I think we’d be far better off, from a risk-management point of view, beginning to adjust these purchases of Treasuries and mortgage-backed securities.

I’d rather start tapering, assuming we meet our conditions, sooner rather than later so that we have more flexibility in deciding what we want to do on rates down the road.

That was enough cold water to send the Dow and S&P into the red where they closed at the session’s lows.

The US Dollar index trod water and ended just about unchanged, as did bond yields. Gold gave up it’s early gains and closed slightly in the red.  

Not much gained and not much lost sums up this Wednesday session.

Due to some business commitments, I will be out tomorrow. The next market commentary will be posted on Friday.

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Despite yesterday’s massive rebound, the markets did not waver but stayed the course and notched more gains. The S&P 500 was trying to get into record territory but fell short, while the Nasdaq showed more upside momentum and climbed to a new all-time high.

The tech sector led Tuesday’s advance by a modest margin, with Small Caps following suit, whereas the value ETF RPV remained unchanged after Monday’s impressive jump.

Equities accelerated to the upside when Fed head Powell answered questions from House members that underscored his bullishness about the economic comeback, while maintaining his stubborn stance that inflationary forces were transitory. He emphasized that inflation should settle back to 2% over the long term.

Be that as it may, the markets took it as a dovish sign and green ended up being the choice color of the day.

The 10-year bond yield rose to touch the 1.5% level but backed off and closed at 1.48%, down 2 basis points. Even though the US Dollar index gave back some of its recent gains, it was not enough to spark a rally in Gold which, in the absence of buying interest, dropped -0.36%.

In the end, it was a positive session after a huge rally, which has a chance to continue provided that dovish jawboning stays headline news.   

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Ripping higher after the sound of today’s opening bell had barely faded was the meme for the day with the major indexes posting solid gains after last week’s Fed induced pullback. Dipping into the red early on was the Nasdaq, which recovered but lagged throughout the session.

When all was said and done, Friday’s plunge was entirely wiped out, and we now find ourselves back at the closing levels of last Thursday. Apparently, traders came to their senses over the weekend due to the Fed’s announcement of possible rate hikes in 2023 being nothing more than jawboning about a distant future, with no imminent action being on deck that could jeopardize the current bullish theme.   

As a result, the markets focused on the present moment and staged a broad rally that allowed some of last week’s hard-hit sectors to recover nicely. “Value” outperformed “growth,” with RPV racing ahead by +2.50% followed by the financials (XLF) with +2.33%. Even the commodities index DBC showed signs of life with a gain of +1.34%.

ZeroHedge pointed out that things got started in Japan last night with their respective Plunge Protection Team (PPT), which bought some $70 billion of ETFs, sending the Nikkei on a rampage. The US followed suit by assembling their own PPT, picked up the baton and the levitation began.

10-year bond yields spiked to Friday’s level, while the US Dollar gave back some of its recent gains. Commodities bounced across the board with GLD adding +1.21%, but more concerning in terms of inflation was Crude Oil’s surge to over $73.  

The direction of some commodities can be a harbinger of what might happen next in the stock market. That lead ZeroHedge to post the question “Is Dr. Copper or Dr. Crude right about what happens next?” Bloomberg points to the divergence in this chart.