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Briefing.com Summary:
*There is some buy-the-dip interest after yesterday's big decline in the semiconductor stocks.
*Oil prices are pushing $70.00/bbl as traffic through the Strait of Hormuz increases.
*Micron is set to report its quarterly results after the close.
Yesterday was a tough day for the semiconductor stocks. They were flooded with selling activity in what was the equivalent of a flash flood. It was a sudden and extreme rush of selling interest that hit fast and hard. Micron (MU), which reports its quarterly results after today's close, dropped as much as 14% before closing with a 13% loss.
The rain is over—for now, anyway. Micron and the semiconductor stocks, as well as the broader market, are on higher and drier ground this morning, bolstered by some patented buy-the-dip interest and a slide in interest rates that has been tied to the ongoing slide in oil prices.
WTI crude futures are down 2.9% to $71.07/bbl, which is the lowest they have been since the war with Iran began in late February. The 10-yr note yield is down five basis points to 4.44%.
The downturn in oil prices has coincided with reports of increased traffic through the Strait of Hormuz and an attestation by President Trump that Iran has assured the U.S. that there won't be any tolls for passage through the Strait of Hormuz.
The president has been quite pleased with the sharp drop in oil prices. He is less pleased that gas prices have not come down as quickly and has instructed the Department of Justice to look into why oil companies have not dropped their prices at the pump commensurate with the lower prices they are paying for oil.
That is some noise in the background today, but in the foreground is an equity futures market signaling a rebound effort at today's open.
Currently, the S&P 500 futures are up 12 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 90 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are down 40 points but are trading 0.1% above fair value.
It is a relatively resilient indication considering Cerebras Systems (CBRS) is down 8.8% in the wake of its earnings report, FedEx (FDX) is down 6.5% following its earnings results, and Morgan Stanley Private Credit has made it known that it is capping repurchase requests at 5% for its North Haven Private Income Fund after receiving repurchase requests that represented approximately 11.6% of units outstanding.
There is just enough lift in the mega-cap stocks, however, to keep the cap-weighted indices on the up and up. That includes Alphabet (GOOGL), whose A shares are being added to the Dow Jones Industrial Average prior to the open on June 29. Verizon (VZ) is being kicked out to make room for Alphabet.
We'll see soon enough how much rebound kick there is in the buy-the-dip trade. Participants will be watching the reaction to Micron's report, which will be released around the same time as the Fed's bank stress test results, as a trading cue.
