On today’s episode of Market Domination Overtime, Yahoo Finance’s Julie Hyman and Josh Lipton break down the market close and some of the trading day’s biggest stories.
Stocks (^DJI, ^IXIC, ^GSPC) inched higher, closing out Monday’s session in the green. As Wall Street awaits the Federal Reserve’s next interest rate decision, Morningstar Chief US Market Strategist David Sekera believes the Fed’s monetary policy choice will be “pretty boring,” and Chair Jerome Powell’s commentary will be largely “unchanged” from previous meetings.
European markets (^FTSE, ^GDAXI, ^FCHI, FTSEMIB.MI, ^IBEX) experienced a slight dip after French President Emmanuel Macron called for a snap election to counter the rise of the far-right. Despite the momentum gained by the far-right across Europe, TPW Advisory Founder Jay Pelosky doesn’t see major policy shifts happening, explaining, “I think the fact that leadership is likely to maintain consistency is probably why the market reaction, while notable… has been relatively muted when you’re talking about a region that has been performing quite well and is up about 10% year to date, in dollar terms, which is not a bad run for the first half of the year.”
There is the closing bell on Wall Street on this Monday and now it’s market domination over time.
We’re joined by Jared to get up to speed on the action from today’s session.
So let’s start with where the major averages ended the day.
The S and P 500 closing at a new record here up by about a quarter of 1%.
If you take a look at the five day, look here.
We have the record happening last week and then a little bit of dip and then coming back up here as for the NASDAQ as well, didn’t quite make it to a record today, but we did see it rise on the day also a little more than a quarter, a little more than a third of 1%.
In fact, and if we look across other asset classes here, we saw that little bit of a rally happen even with yields higher.
Many investors are focusing on Wednesday.
That’s when we get both the consumer price index as well as the next fed decision even though, they’re not expected to do anything.
We’re also going to get the so called dot plot update that day, which could affect things in terms of where markets go.
Also want to take a quick check on crude because we saw a big move upward there as well that we’re keeping on moving up towards $78 a barrel.
Let’s go over to Jerry now for a closer look at today’s action.
Thank you Julie on a day when not only was a 10 year up, so was the dollar.
We actually see quite a bit of green here.
So you can see behind me on the wi I interactive Utilities was the biggest winner here.
Unusual again on a day when you have increased interest rates because they compete uh in their bond like uh status.
So XL, you have 1.3% financials materials and Staples traded to the downside here.
I’m gonna show you a quick picture of the NASDAQ 100 there you can see uh a couple of outlier liar.
Uh I was looking at Staples which was down and if you take a look at our food heat map, you can see a lot of dark right here.
That’s Pepsico down 3%.
And then if you take a look at some of its restaurant cousins, well, we’re seeing a lot of red there too.
Not all of it, but basically food kind of has a negative tilt to the day.
Finally here, a quick, uh, quick service restaurants, fast casual, fast food, seeing a lot of red there as well.
You can see Conocophillips up over 1% Exxon up a third of a percent Chevron a little bit more.
And for the most part, uh it wasn’t a day when tech screaming, but I’ll leave us with a picture of the semiconductor market aside from a MD, pretty solid day here of gains.
All right.
Thank you, Jared investors on edge ahead of the Fed’s decision.
Wednesday, the major indices eking out small gains with the S and P 500 NASDAQ closing at new record highs joining us now is Morningstar Chief us market strategist David.
I mean, I think our central bankers have, have made it clear David there and no hurry to cut.
But what are you expecting the Fed to say and do this week?
You know, as far as Fed meetings go, I suspect this one’s going to be pretty boring, relatively uneventful.
I expect the commentary from Chair Powell, you know, largely going to be unchanged from the commentary he’s made in the past.
So I think likely he’ll just mention that they still want to see additional data to get the confidence that inflation is on that study downward path.
I think they’ll acknowledge that the economy is slowing but not slowing to the point that it’s necessarily concerning the fed at this point.
So I don’t think we’re going to get any kind of commentary surrounding, you know, when the fed will be thinking about the fed starting to cut the federal funds rate.
I think it’s really going to be the July meeting.
That’s going to be the one that’s going to be a lot more important.
You know, we do think the fed is going to start cutting rates at September.
So if they do start cutting rates at September, I think they’re going to want to give that indication to the market, you know, at the July meeting.
So I think that’s when they’ll start providing some guidance, maybe remarking that, you know, the fed has then at that point, the higher confidence inflations on that downward path and maybe also mentioning and highlighting that restrictive monetary policy has been slowing economic growth.
Um What about, I mean, we’re all also of course, getting CP I on Wednesday morning and how confident are you that we’re going to continue to see sort of deceleration in inflation that will allow the fed to start cutting as soon as September, our US economics team is still very confident that they are expecting moderating inflation in the second half of the year.
They look at a lot of different real time indicators like shelter and rent costs.
So those have been coming down for a while.
They expect those to start filtering through the next couple of months.
So really, it’s just that combination of inflation starting to moderate the slowing economic growth that will give the fed the room that needs to cut.
We think that they cut at September probably skip at the next meeting and then cut one more time at December.
So our base case fed funds rate comes down to the end of the year to that four and three quarter to 5% level.
But we don’t think the fed will be done there.
We forecast the fed will continue to cut through much of 2025.
And in fact, by the end of 2025 our US economics team expects the fed to get down to 3 to 3 and a quarter percent.
Let’s say David, uh you know, your base case doesn’t come to pass.
The fed doesn’t cut this year.
Would that change your view, David oo of the US stock market, does the market need those cuts to move higher?
We do think that they’re going to need those cuts to move higher.
So right now, you know, when we look at real GDP, our base case is no recession.
We’re looking for that soft landing, you know, albeit slowing rate of growth for the next couple of quarters.
But that’s also predicated on our assumption that we do think the fed, you know, starts to cut.
So if they don’t cut, that could put that base case, you know, into jeopardy and, you know, we could slip into a recession, you know, early next year, you know, if that doesn’t happen.
Uh, David, I wanna switch gears for a sec because we’ve been talking a lot about technology today.
We’re not done, we’re never done when it comes to this stuff.
And, um, we recently saw a chart uh came to us from Torsten Slack of Apollo, which happens to be the parent company of Yahoo Finance.
But um, he’s not alone in the observation looking again at the concentration of large cap tech in the S and P 500 the top 10 stocks overall in the S and P now make up 35% of that index.
Well, like anything else, you know, it really always comes down to the fundamentals of the individual stocks now, specifically within technology, you know, the past couple of quarters, I’ve really kind of been breaking technology into three different buckets, you know, in my own mind.
So we have, you know, the A I and the cloud again, that’s the area that has the highest growth, the best long term secular trends.
But generally speaking, those stocks are pretty fully valued, you know, if not getting to be overvalued at this point, you know, NVIDIA, we still see another 4 to 6 more quarters where demand is gonna well outstrip supply.
But even thinking about that, you know, it’s a three star rated stock trading, you know, relatively close to our fair value.
You know, then I look more at the traditional tech names again, that’s where we’re starting to see, you know, some of the better undervalue opportunities.
My concern is that it might be a couple more quarters, you know, before some of those names, you know, start to work, see some value in the semiconductor space, the software and the service space.
Uh I still cybersecurity, Fortnite and Palo Alto are two stocks that we rate, you know, four stars that we think are attractive.
And then lastly in t there’s the legacy names, the names that we think the best days are behind them, you know, two star rated IBM, two star rated Hewlett Packard would be the two that I would shy away from.
Finally unveiling its A I platform and its worldwide developers conference along with details on a deal with open A I.
Let’s get to Yahoo Finances tech editor Dan Halley, who’s joining us live from Cupertino, California at Apple’s event.
Um Dan, we talked a little bit earlier about some of the features that Apple announced specifically talk to us a little more about that partnership with Open A I and the implications of it and kind of how it’s gonna work.
Yeah.
So really what they’re doing is they’re gonna be integrating uh GP T technology, open A I technology into uh IO SS.
So uh you’ll be able to do things like pull up Siri asked a question, you can choose if you want to have a GP T answer or Siri answer.
Now, Apple says that uh all the uh information, your data, all of that is going to uh not go up to uh uh open A I, it’s not gonna be shared, it’s not gonna be used to train anything.
Uh And that really is something that’s, that’s important.
Uh We saw uh Sam Maltman wandering around uh ahead of the event.
Uh They didn’t make too much fanfare of the announcement.
It was relatively small when you take into the, the totality of what Apple announced here.
But uh you know, the Apple Intelligence platform is uh seemingly a, a kind of, you know, new way for Apple to move forward because it’s going to be across all of these different platforms with us.
I on ipad mac, I didn’t say anything about uh uh vision pro yet or watch Os uh or, or Apple TV.
Uh But the uh the fact that it’s gonna be on iphone, on ipad and on Mac and talking across those is really important.
And I think when you look at the companies that are offering consumer level A I, that’s Microsoft Apple and Google Apple seems to have really started to come out on its own uh ahead of the other two.
Now, that being said they were only just announced, we haven’t used it yet.
We haven’t seen what kind of hiccups there might be, you know, Google and Microsoft did announce their own A I products and they had hiccups.
In fact, Microsoft just had to pull back its recall feature, an A I driven feature uh before they even released it because of some backlash about potential security issues.
So this is a big move for Apple, they’re gonna have to be uh essentially uh testing it.
They’re going to roll out the beta uh the be and then the public data and then we’ll see what kind of reactions uh users give uh towards that.
But it’s, it’s interesting because they’re also not just doing this using Apple software, they’re also opening it up to third party software.
Uh So you’ll be able to do things like ask your phone to take advantage of certain app features uh or pull up information from certain apps.
So it really is kind of an all in approach for Apple here and for a company that, you know, been waiting for two years to see what they were going to do with generative A I, it really seems as though they’ve delivered on what was expected, but nothing over and beyond that.
And Dan, I’m interested too, you know, one theme today was privacy.
Apple really emphasizing that, you know, not surprising that that’s a core value in Cupertino.
I’m just, I’m curious to get your take, Dan.
How much do you think that resonates with consumers?
How much that matters with consumers?
But I think for, for most people that’s, you know, a big selling point for Apple, they push security as, as a selling point and privacy as a selling point for themselves all the time.
Um And I think that for, for the average consumer, when they think of Jar of A I, there’s questions as to whether or not their data is going to be used to train models or be sent back to uh some large server where it’s held on to indefinitely.
Uh Apple making sure to say, look, we’re going to send the bare minimum amount of data, it’s going to go to special Apple servers running on apple silicon with all the kind of privacy you would expect and then it’s not going to be stored there.
So that’s an important differentiator for Apple that they’re, they’re trying to use.
I think one of the other important differentiators to point out and one of the things that they try to lay out at the top is that this is all going to be context sensitive to your information now, rather than a broad based kind of uh GP T or, or uh Microsoft Google.
This is all gonna be based on your data.
So when you pull stuff up on your phone, you’re gonna be looking for information from your apps.
Uh I used an example earlier about if you have to pick someone at the airport, uh you could say, should I leave for the airport?
Well, what time do I have to pick up mom or whatever?
Uh And it’ll look through your content and tell you exactly what you need to know.
And I think that’s a key differentiator for Apple here making it about security as you as you point out and then about the context sensitivity here.
That’s something that I think is really important and could be a major selling point for Apple just making things a lot easier for consumers overall.
Dan Finally, I want to ask you, I mean, you are immersed in tech, you use it a lot in your daily life.
What was the feature today that most wowed you that they introduced?
Honestly.
I, I think for myself, we want to see how this whole context sensitivity thing works, right?
Uh But for me, it’s gonna be about how does this now pull information that I need up like surfaces it properly for, for me?
Um I think, you know, for, for generative A I for consumers, this is probably the way to go.
Uh being able to edit my photos is fun and all uh being able to, you know, uh edit some, some audio, great fun uh interesting ways to use this but the the the the contact sensitivity pulling up content that I need summarizing things for me in an easy to understand way that the, the notifications feature that they announced uh the uh the sensitivity for, for notifications that you want.
So I don’t need to know that the Mets lost again before I get a text message from my wife.
It’ll stack them the right way.
The more important one, my wife, the less important one, the Mets lost.
Now, if the Mets win, they’re more important but they’re not so whatever.
But I think that’s something that is, that is very important and something that I think overall is going to be a selling point, not just, not just for me, but for most people, we just have to see if they can deliver exactly what they promised.
Those are going to be the two really determining factors here, Dan, thank you so much.
On the other side, some Tesla shareholders already voicing their stance on Elon Musk’s controversial pay package comes ahead of the EV Giants announcement on the vote results later this week in Yahoo Finance’s Prize Sumera and joins us now with more on the very latest prize.
Yes, the number of some of these bigger funds and, and shareholders weighing in here.
Uh One of the biggest over the weekend was uh the Norway Sovereign Wealth Fund and they’re coming out against must pay package.
They have about a 1% stake, 32 million shares.
So that’s the seventh largest shareholder uh for Tesla.
And they say they’re concerned about the size dilution, key man risk, things like that.
So they’re gonna vote against and they also voted against in 2018.
Calor is also the big uh California Fund.
They call it uh an interview at the C NBC, the head of it called it the package ridiculous.
And they have about 4.7 million shares.
So not as big as, as Norway, but still a sizable holding.
And also on the flip side, Billy Gifford came out on the positive side saying they are gonna vote for it saying that the package is ambitious but also kind of tied in with shareholder sort of interest and shareholder concern.
So that’s sort of alignment there with shareholders.
So that’s why they’re sort of, how’s your count looking so far?
I mean, II I thought the conventional wisdom was that even though there were some prominent voices who were opposed, that it would pass, but there are some analysts who are sort of questioning whether indeed it’s going to pass.
Yeah.
You know, uh Dan Ives Web Bush said it should pass pretty strongly but not, maybe not the 73% it passed in 2018.
And then Garrett Nelson of CFR I says, he’s not sure we’ll see what happens.
It’s kind of in the air.
Uh Elon complaining about this, I think on Twitter talking about how 90% of retail investors are with him.
But the big question is retail investors don’t always vote, right?
They, it’s not as easy for, as them, for a bigger fund to do so.
So it’s gonna, I think it’s gonna come down to the wire.
It’s gonna be a pretty exciting day on Thursday when the meeting takes place.
When might we know?
Are we gonna, I mean, around what time on Thursday do we expect?
You know?
So the meeting starts at 430 Eastern on Thursday and you’re probably going to find out shortly thereafter.
We’ll start going through some of the amendments and then give us, you know, I think on the, on the 12th you can begin voting if you haven’t already done.
So, so the voting will have closed by 430 then they just have to get the tabulation and they’ll go through all the sort of the non exciting amendments and get to the exciting amendments.
Well, a political shocker in Europe over the weekend, a surge from the far right in a European parliamentary election tr triggering among other things, French President Emmanuel Macron to call for a snap election in France later this month for more on this and the impact it has on European stocks moving forward.
We want to welcome in Jay Pulaski, founder of TPW Advisory Jay.
Um French stocks fell today and we really saw a ripple effect across markets in Europe.
Does this, does this put markets there at a disadvantage as we see this political turmoil?
Uh Actually the result was I believe pretty much as expected and you saw that in the market reaction, which was relatively muted, right?
I think we need to recall that um the euro, for example, was up about 2% versus the dollar over the past month.
European stocks just hit an all time high last week.
So, you know, in the opportunity for a little profit taking, I’m actually surprised the reaction was muted as it was.
And I think it’s largely because the headlines are talking about a far right kind of expansion of their, of their vote share.
The reality is that several weeks ago, the far right parties were expected to do considerably better than they actually ended up doing.
And the reality is that the mainstream center right parties will remain in control of the European parliament.
So I like to see a lot of policy shift as a result of this.
And then finally, what is interesting to me is that as you pointed out, France and Germany were the places that really saw a significant erosion of votes for the leading parties.
And that’s very different from prior European crises where it was typically the periphery, right?
Remember Greece, remember Italy, Portugal, Spain.
Now it shifted to the center of Europe which is uh is interesting and worth contemplating.
And and Jay, you mentioned this, I just wanna, I wanna dig into a little bit more, you know, for investors who are listening right now, Jay, are, are there any kind of read throughs any kind of policy, potential policy implications for taxes or regulation?
You, you seem to be suggesting perhaps not, no, I don’t think the policy shifts are going to be very significant.
I mean Europe does need to accelerate kind of its decision making and its integration.
We just wrote our latest monthly focused on the question of who is going to win the second half of the 20 twenties, whether it’s going to be Europe or Asia or the Americas in our trip polar framework.
And Europe obviously has an opportunity because it’s more integrated than any of the other regions, yet it needs to move further and faster on things like joint funding of defense on moving forward with A I, not just being content to be a regulator, it needs to be in the game of A I and issues like that.
So it’s an opportunity for you.
I think the fact that leadership is likely to maintain uh consistency is probably why the market reaction uh while notable as you point out has been relatively muted when you’re talking about a region that has been performing quite well and is up about 10% year to date, uh in dollar terms, um which is not a bad run for the first half of the year.
And Jay, it sounds like that, you know, even with this risky gambit of Macron calling for a snap election, it doesn’t sound like you think anything substantial will change in that, that would, for example, cause him to leave power sounds like you, you think it should be fairly status quo.
Well, yeah, in France, in particular, there’s likely to be some cohabitation, right?
This is, this is an effort to try and put the uh far right uh into power to see how they kind of perform because traditionally, uh these parties are much better at complaining than governing.
And so this is, is somewhat risky, Macron can’t run again.
Uh He’s, his term is up in 2027.
So it’s more, but I think that’s much more French centric, right?
And we’re talking eu wide and they uh the the big issue which is how we’re playing it.
We’re not invested in France, for example, specifically, we’re invested in Europe, we’re invested in European banks, we’re invested in countries like Poland, which is a beneficiary from European regional integration.
So in that sense, that view has not, has not changed really at all.
And I think again, the point that investors should care about is earnings growth in Europe is robust that the European economy is recovering, that the ECB has started to cut rates and that is being seen as growth supportive rather than set, you know, risk of recession rising.
And I think that’s why European stocks have done well here or date.
Why it hasn’t been much of a reaction today uh really at all and why we remain invested in Europe uh and expect it to continue to do well, Jay, thanks so much for joining us today.
I appreciate it.
Always a pleasure, take care time now for to watch Tuesday, June 11th starting off on the earnings front oracle is reporting fourth quarter earnings after the close, analysts expecting sales to come in above consensus due to demand for A I workloads, those gains could be offset by slower than expected expansion in its cloud applications including Cerner products.
Over to another name in that day, two of Apple’s worldwide developers conference in tomorrow on day one, Apple announced a partnership with open A I to integrate chat team, its operating systems.
Apple also announce it giving the A I upgrade and IO A powered by the company, a product which it calls Apple Intelligence and taking a look at the economy.
The small business optimism index coming out in the morning, economists forecasting that number to whole study at 89.7 giving us more insight into the health of the labor market.
This coming after the last Friday jobs report where non farm payrolls came in much higher than expected.
I realized where I said that I emphasized it wrong.
It’s not Apple intelligence, it’s Apple intelligence as opposed to artificial that really drove the public said that.
Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to you and after the closing bell, but don’t go anywhere on the other side of the break.
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