Last week had one less trading day in it, yet that didn’t stop the major indices from posting some full-sized losses. The S&P 500 dropped 4.3%, the Russell 2000 sank 5.7%, and the Nasdaq Composite declined 5.8%.
The list of casualties goes on. For instance, the Philadelphia Semiconductor Index plunged 12.2%, NVIDIA (NVDA) tanked 13.9%, and Dollar Tree (DLTR) plummeted 21.3%.
It is perhaps no surprise, then, that there is a rebound impulse this morning.
Currently, the S&P 500 futures are up 37 points and are trading 0.7% above fair value, the Nasdaq 100 futures are up 146 points and are trading 0.8% above fair value, and the Dow Jones Industrial Average futures are up 277 points and are trading 0.7% above fair value.
The trend reversal has extended to the dollar, oil, and Treasuries. The U.S. Dollar Index is up 0.4% to 101.62; WTI crude futures are up 1.1% to $68.43/bbl, the 2-yr note yield is up four basis points to 3.69% and the 10-yr note yield is up three basis points to 3.74%.
It is too soon to say this is the start of something big. It is simply the start of something after big losses, which makes it reflexive in nature. Frankly, how the market starts today is irrelevant to how it finishes.
Will there be a successful buy-the-dip rebound or will the gains invite renewed selling pressure?
The opening success will be paced by rebound action in the mega-cap stocks. Notably, Apple (AAPL), which is holding “It’s Glowtime” event at 1:00 p.m. ET today, presumably to announce the launch of its iPhone 16, is little changed. Other mega-cap stocks like NVIDIA, which is up 1.2%, and Amazon.com (AMZN), which is up 1.4%, will be doing the driving.
Elsewhere, Boeing (BA) is up 3.2% after announcing a tentative agreement on a key labor contract; and Erie Indemnity (ERIE), Dell (DELL), and Palantir Technologies (PLTR) are up 3.9%, 4.8%, and 8.8%, respectively, on the news that they will be added to the S&P 500 prior to the open on September 23, replacing American Airlines (AAL), Etsy (ETSY), and Bio-Rad (BIO).
Trading opportunities are alive and well today, which should be the case throughout a week that will also feature the presidential debate on Tuesday night, the August Consumer Price Index before Wednesday’s open, and the ECB policy meeting on Thursday.
We’ll see at Friday’s close how that is all resolved in the market’s mind, which is focused on a rebound trade at today’s open.
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Originally Posted September 9, 2024 – A rebound impulse
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I think we are poised for a move to the downside