Major Markets Are Having Very Different Years

by 3 weeks ago

Unplash/Nick Chong


 

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Anytime you can reference a biggie song it’s a good day.

Stocks had an interesting day yesterday that started late Monday night after Peter Navarro almost went and f*cked everything by saying the US-China trade deal was “over”. By the time we all woke up on Tuesday, Navarro had walked back his statements, and the markets recovered.

The Nasdaq had a modest .74% gain yesterday, but finished the session in the black for a record eighth straight day, hitting an all-time high. It was powered by Apple’s surge following the developments the company released at WWDC. Tim Cook’s crew is also on a hot-streak and saw the stock hit a new personal best.

All three indices closed up on the day, with the Dow and S&P finishing up .5% and .43%, respectively.

The gang’s all here!

Not quite. All indices are not created equal. Sure, all three have recovered from coronavirus lows back in March but that doesn’t mean each index has recovered proportionately.

Year to date, the Dow is still down 8.3%, while the S&P is doing ok for itself, up 3.1%. And the Nasdaq? It’s out here living its best life, up 13% on the year. That’s the biggest disparity between the Dow, which contains some of the US’ largest companies, and either the S&P or Nasdaq since 1983.

But why? One word: tech. Four of the five FAANG stocks plus Microsoft account for 40% of the Nasdaq and 20% of the S&P. Both “smaller” indices contain stocks with lower market capitalizations but high growth potential. Still, such a large gap is pretty wild.

The bottom line…

The tables may even out pretty soon though. Word on the (financial) street is that investors are ready to take some profits from all these gains, and put the money into bonds.

According to some, the broader sell-off could be in the billions. June 30th marks the end of Q2 for many investment firms who will be happy to show their clients strong profits.

On top of that, there is a major short position in the E-mini S&P 500, which is effectively a bet on the S&P going forward. Right now there are 303k contracts shorting the market, compared to 55k in March. I’ll be in the bunker…

Water Cooler Talking Point(s)

💧 “Real investors have no idea WTF they’re doing. Just ask Davey Day Trader.” – (Ian, The Water Coolest HQ)

 

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TAGSEconomyFinanceinvestingMarkets