Nasdaq 100, Dow Jones, S&P 500 News: Crypto Surge Lifts Coinbase, Microstrategy

Stock Market Kicks Off Second Half with Mixed Performance

Wall Street’s main indexes opened higher on Monday as the second half of 2024 began, with investors eyeing upcoming economic data and rotating out of technology stocks. This mixed start reflects the market’s cautious optimism and ongoing reassessment of sector valuations.

At 14:11 GMT, the Dow Jones Industrials Average is trading 39308.49, up 189.63 or +0.48%. The S&P 500 Index is at 5460.05, down 0.43 or -0.01% and the Nasdaq is trading 17711.59, down 21.01 or -0.12%.

Evidence of Sector Rotation

Technology giants Microsoft and Alphabet traded marginally lower, with AI darling Nvidia slipping about 3%. This pullback led a broader decline in chip stocks including Broadcom, Qualcomm, and AMD, signaling a potential shift in investor sentiment towards the tech sector.

First Half Recap

The first half of 2024 saw strong gains, with the S&P 500 up 14.5% and the Nasdaq Composite rallying 18.1%, driven by AI enthusiasm. The Dow lagged, adding 3.8% due to second-quarter weakness. For Q2, the S&P and Nasdaq gained 3.9% and 8.3% respectively, while the Dow lost 1.7%. The Nasdaq’s performance marked its third consecutive positive quarter, a feat not seen since 2021.

Sector Performance

As of the latest trading session, sector performance showed significant divergence:

• Utilities led gains, up 0.74%, suggesting a defensive tilt among some investors.
• Energy and Financials both rose over 0.65%, potentially benefiting from economic recovery expectations.
• Consumer Discretionary stocks gained 0.62%, indicating continued consumer confidence.
• Technology, despite its strong first-half performance, dipped 0.2%, reflecting the ongoing rotation.
• Industrials and Real Estate sectors showed weakness, down 0.22% and 0.12% respectively.

Economic Data in Focus

Investors await manufacturing PMI numbers and Friday’s June jobs report for insights into labor market conditions. These data points could influence expectations for Federal Reserve interest rate cuts. Kevin Philip, partner at Bel Air Investment Advisors, noted, “This is one of those times we have seen before where ‘good news is good news, and bad news is good news’ for US stocks.”

Cryptocurrency Surge

Bitcoin rose 5% over the weekend, reaching $62,000. Crypto-related stocks like Coinbase, MicroStrategy, and mining companies also traded higher in premarket action, suggesting continued interest in digital assets despite recent volatility.

Notable Stock Movements

• Birkenstock jumped 3.5% after a UBS upgrade, citing higher average sales prices and strong growth in Asia.
• Chewy soared over 16% following news of meme stock trader “Roaring Kitty” taking a 6.6% stake in the company.
• Boeing announced plans to buy back Spirit AeroSystems in a $4.7 billion all-stock deal, with Spirit’s shares popping 4.5%.

Market Forecast

The short-term outlook remains cautiously optimistic, with technology-driven momentum expected to persist through summer. However, investors should watch for potential volatility around economic data releases and prepare for possible sector rotations as the market digests recent gains and reassesses valuations.

As the market enters the second half of 2024, traders should remain alert to shifts in sector leadership, potential impacts of upcoming economic data, and the ongoing influence of AI-related enthusiasm on tech stocks. The balancing act between growth expectations and valuation concerns is likely to drive market dynamics in the coming months.

Technical Analysis

The E-mini Dow Jones Industrial Average futures contract is trying to establish support at or near the 50-day moving average at 39410.  If successful, traders may make a run at near-term resistance at 39,999. If support fails, momentum will shift lower, making 38701 and 38520, viable targets.