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Stock market bulls got running yesterday with the news of a ceasefire between Israel and Iran, a big decline in oil futures, a drop in Treasury yields, and a Fed Chair who didn't sound indisputably hawkish-minded at his semiannual monetary policy report before the House Financial Services Committee.
An encouraging outlook from cruise line operator Carnival (CCL), another surge in the semiconductor stocks, and ongoing leadership from the mega-cap stocks were like three cherries on top of an already tasty sundae.
The buying interest sent the Nasdaq 100 to a new all-time high and left the S&P 500 less than 1.0% from a new all-time high of its own. The bulls don't look ready to be sent out to pasture just yet either.
Currently, the S&P 500 futures are up 10 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up 94 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up one point and are trading fractionally above fair value.
There is a bid again in the mega-cap stocks that is supporting the market. That includes Tesla (TSLA), which is up 0.9% despite Reuters reporting that Tesla's European car sales were down 27.9% yr/yr in May, marking the fifth straight monthly decline.
The market is also showing resolve despite a FedEx (FDX) earnings report that included disappointing fiscal Q1 guidance and a lack of full-year guidance due to the macro uncertainty. Shares of FDX are down 5.0%.
Some have been inclined to see FedEx's disappointment as a company-specific shortcoming, which is perhaps why it hasn't had a broader market impact, but it is hard to see through that fog when all "Magnificent 7" stocks, with their massive market caps, are trading higher in pre-market action.
That is certainly enough to keep the market cap-weighted indices propped up and momentum investors engaged, coupled with the allure of the S&P 500 being on the brink of a new all-time high.
It feels like there is a gravitational pull to that level, but it shouldn't come as a surprise if some selling kicks in once it is achieved (assuming that it is). That may or may not happen today, but the mega-cap stocks are likely to be one's guide.
Separately, NATO confirmed its commitment to a 5% defense spending target, and Fed Chair Powell will be giving some noncommittal policy guidance today when he appears before the Senate Banking Committee at 10:00 a.m. ET for the second day of his semiannual monetary policy report to Congress. That session will begin at the same time the May New Home Sales Report (Briefing.com consensus 700,000; prior 743,000) is released.
The Treasury market, for its part, will be taking all that in, along with the results of the $70 billion 5-yr note auction at 1:00 p.m. ET. Currently, the 2-yr note yield is down one basis point to 3.80%, and the 10-yr note yield is up one basis point to 4.31%. The U.S. Dollar Index is up 0.3% to 98.18.
