To The Moon

US stocks and bonds fell on Thursday after surprisingly strong economic data caused traders to reduce bets that the Federal Reserve will cut rates this year. Rate-sensitive real estate and utility companies were the biggest casualties as the S&P 500 had its worst day in May. The yield on 10-year Treasuries climbed to the highest in more than a week.

Blood bath Thursday🩸

During Thursday’s session, chipmaker Nvidia added more than 9%, propelled by strong guidance in addition to an earnings beat and a 10-for-1 stock split. Nvidia has become a key bellwether for the broader market, and it is the de facto leader of the so-called “Magnificent Seven.”

The rise in the artificial intelligence darling did not help the market, however, with more than 400 stocks in the S&P 500 closing lower. The broad market index lost 0.74%, while the Nasdaq Composite fell 0.39%. The Dowsuffered a 1.53% decline for its worst session since March 2023, weighed down by a 7.6% drop in Boeing.

Dip buy opportunities?

“Markets tend to take breather heading into a long holiday weekend,” said Jamie Cox, managing partner at Harris Financial Group. “The Fed minutes provided the catalyst and not even Nvidia could refocus markets on the positives.” Indeed, at their latest meeting, central bank policymakers had expressed worries over the lack of progress in tamping down inflation.

Thursday’s PMI data, with both services and manufacturing beating estimates, and therefore supporting the view that the US may still be growing above trend. Treasuries sold off on the news as swaps removed as many as 10 basis points in anticipated easing through the middle of next year. We still have about four and a half 25-basis-point cuts priced in through the end of last year. But any good data like we saw today will drive traders to price cuts out, hurting the belly of the curve from 2 to 5 years.

The S&P 500 is tracking for a weekly loss of 0.7%, while the Dow is on pace to drop about 2.4%. The Nasdaq is the outperformer, with a modest gain of 0.3%.

Day trade buy call 01

Dat trade bull call 02

Credit spread for NVDA

On Friday, traders will be watching for April’s durable goods report and May’s reading of the University of Michigan’s consumer sentiment index.

🚨 Subscribe to my trade alerts via Trading Sparks. Please click Like 👍, Comment 💬 & Repost 🔄 this article found at the bottom of your screen. Follow me for the latest news, trading ideas & strategies to ride the market daily with profits!

@CaptainTiger @Daily_Discussion @Andreana @Aqa @AyKing @jace0777 @koolgal @KylerLee @mster @Terra Incognita