3 Things… 

1. Trends/Bonds: S&P500 is only a hair under 2% below its 200-day MA, momentum to the upside/downtrend fading; NASDAQ is now about 4% below its 200-day MA, momentum vigorously to the upside/downtrend  fading but unchanged; 89% of the S&P 500 and 73% of the NASDAQ, respectively, are above their 50-Days; Bulls32:Bears37; VIX 19.36; [1] The yield on the benchmark 10-year Treasury note dipped more than 3 basis points to 2.853%. The yield on the 30-year Treasury bond also ticked about 3 basis points lower to 3.124%. The weekly 2-year Treasury note/10-year Treasury note Spread fell to 1.13. Yields move inversely to prices and 1 basis point is equal to 0.01%. [2]
2. Sectors: Best 3-month sectors: Consumer Discretionary (+14.54%); Tech (+13.86); Utilities (+8.81); Crypto/Bitcoin $23,976.24; [3]
3. Structured Note Values
   1. XLE/XOP Lowest, XLE Pricing Value 3/25/22: 78.75, Current: 77.26, Delta -1.89%; XOP Pricing Value 3/25/22: 138.60, Current Value: 137.91, Delta -0.50%
   2. Lower of GDX/GDXJ; GDX Pricing Value: 4/29/22: 34.99, Current: 27.08 Delta -22.61%; GDXJ Pricing Value 4/29/22: 42.95, Current: 34.41 Delta -19.88%
   3. Lower of GDX/GDXJ; GDX Pricing Value: 5/26/22: 32.39, Current: 27.08 Delta -19.88%; GDXJ Pricing Value 5/26/22: 39.67, Current: 34.41, Delta -13.26%
   4. ARKK Pricing Value 6/15/22: 39.42, Current: 51.49, Delta +30.62
   5. ARKK Pricing Value 7/15/22: 44.11, Current: 51.49, Delta +16.73%
   6. SPX Pricing Value 7/18/22: 3863.16, Current 4242.94, Delta +9.83%
   7. RTY Pricing Value 7/18/22: 1744.37, Current: 2005.90, Delta +14.99%
   8. NDX Pricing Value 7/18/22: 11,452.42, Current: 12936.90, Delta 12.96% [4]

This Week’s Quotable

“Based on what the jobs number showed us this week, and what the CPI and the PPI in particular showed us this week, this may overall work pretty good for earnings. … The fundamentals are indeed getting better, even as many challenges remain in the landscape,” Oppenheimer’s John Stoltzfus said on CNBC’s “Squawk on the Street” Friday August 12, 2022. [5]

Recent Highlights

• Import prices decreased 1.4% (08/12)
• Export prices decreased 3.3% (08/12)
• Initial Claims increased to 262,000 (08/11)
• PPI decreased 0.5%/Core PPI increased 0.2% (08/11)

In the Markets

U.S. stocks ended mostly lower on Thursday although another batch of better-than-expected inflation data showed that soaring prices may be finally easing. However, investors felt that the Fed might still need to continue with its aggressive rate-hike policy to get a complete grip on surging inflation. The S&P 500 and the Nasdaq ended in negative territory, while the Dow closed in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) gained 0.1% or 27.16 points to end at 33,336.67 points.

The S&P 500 fell 0.1% or 2.97 points to finish at 4,207.27 points.

The Health Care Select Sector SPDR (XLV) lost 0.7%, while the Industrials Select Sector SPDR (XLI), declined 0.5%. The Energy Select Sector SPDR (XLE) advanced 3.4%. Six of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq declined 0.6% or 74.89 points to close at 12,779.91 points.

The fear-gauge CBOE Volatility Index (VIX) was up 2.33% to 20.20. Advancers outnumbered decliners on the NYSE by a 1.54-to-1 ratio. On Nasdaq, a 1.25-to-1 ratio favored advancing issues. A total of 12.36 billion shares were traded on Thursday, higher than the last 20-session average of 11.06 billion.

Investors Still Worried About Inflation

Thursday’s session started on an optimistic note as another round of better-than-expected inflation data gave a further boost to investors’ confidence, as the producer price index (PPI) for July surprisingly declined from June. The good news came just a day after the Labor Department said that July’s consumer price index remained unchanged after increasing 1.3% in June.

Thursday’s data suggested that the soaring price gains are finally easing. This gave investors the feeling that the Fed, which will take these data into consideration, will be less aggressive in hiking interest rates in its September meeting. This sent stocks on a rally.

However, markets couldn’t hold on to the momentum as investors are still worried as prices are still high.  The recent decline in energy prices and commodities is one major reason that has slightly eased inflation but analysts believe that higher housing costs could pose a threat and could keep core inflation at a high. 

This once again gave them a feeling that the Fed could continue to aggressively hike interest rates in its next meeting to get a full grip on the already elevated inflation. The negative sentiment at the end of the day once again took a toll on stocks, with all the three major indexes paring almost all their day’s gains.

However, financial stocks benefitted from this. Shares of Bank of America Corporation (BAC) gained 2.4%, while The Goldman Sachs Group, Inc. (GS) rose 1.1%.

Earnings Season Coming to a Close

The earnings season is coming to a close with 91% of the S&P 500 companies having already reported their quarterly results. The earnings season so far has been impressive despite many companies having issued poor revenue guidance for the next quarter.

The Walt Disney Company (DIS) was the big gainer on Thursday after it posted stronger-than-expected growth in subscribers in the last quarter besides beating earnings and revenue expectations. The company reported third-quarter fiscal 2022 adjusted earnings of $1.09 per share, beating the Zacks Consensus Estimate of $0.94 per share. Shares of Walt Disney jumped 4.7%.

Economic Data

The Labor Department said on Thursday that the producer price index or PPI for July dropped 0.5% against expectations of a rise of 0.2%.

In other economic news, jobless claims totaled 262,000 for the week ending Aug 6, increasing 14,000 from the previous week’s revised level of 248,000. The four-week moving average also increased to 252,000, an increase of 4,500 from the previous week’s revised average of 247,500.

Continuing claims came in at 1,428,000, an increase of 8,000 from the previous week’s revised level. The previous week’s numbers were revised up by 4,000 from 1,416,000 to 1,420,000. The 4-week moving average was 1,399,250, an increase of 23,750 from the previous week’s revised average of 1,375,500. [6]

Sources: [1][3][4] Stockcharts.com; [2] CNBC.com; [5] https://www.cnbc.com/2022/08/05/jobs-report-july-2022-528000.html; (cnbc.com); [6] Zacks Professional Services, “Today’s Key Market and Economic News” for Friday August 12, 2022;