U.S. Equity Benchmarks Surge| Morning Express | 1/24/2023

Posted: Jan. 24, 2023, 8:43 a.m.

Fundamentals: U.S. equity benchmarks surged again yesterday, with the S&P tapping the highest level since the December 14th Fed meeting. It has been a tech-fueled rally, with the NQ staging a two-day 5% ripper, set off by strong subscriber growth from Netflix after the bell Thursday and cost-cutting measures. At the same time, recession fears are percolating through the in-favor Dow. In yesterday’s Midday Market Minute, Bill Baruch pointed to the NQ exceeding last week’s high by 2% yesterday, whereas the Dow settled more than 50% below such a peak. Is the NQ’s leadership a precursor to a larger bull market run, or is the Dow’s shallow recovery a canary in the coal mine? This question will lead us into the heart of earnings season, and from a deluge of names that reported this morning (JNJ, DHR, VZ, RTX, UNP, GE, MMM), only LMT is in positive territory. From that list, GE and MMM lowered forecasts, while MMM announced a plan to cut 2,500 jobs. It will be interesting to see how the market responds to layoffs spreading outside of the tech space. All eyes will be on Microsoft, which is due to report after the bell and is still about 5% below its December 14th.

 

Flash PMIs from the U.S. are due at 8:45 am CT. Although the Eurozone read topped expectations, it was a very mixed report. France beat on Manufacturing but missed and contracted on Services. Germany beat on Services but missed and contracted on Manufacturing. The only problem is France is a service-led economy, and Germany is a manufacturing-led economy. Similarly, the U.K., an economy dominated by services, missed and contracted on such.

E-mini S&P (March) / NQ (March)

 

S&P, yesterday’s close: Settled at 4036.50, up 48.00

NQ, yesterday’s close: Settled at 11,934.00, up 257

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NQ (March)

 

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