- Lululemon Beats On Earnings
- Alibaba Breaking Into 6 Separate Companies
- VIX Below 20
It was a slow Tuesday with stocks largely unchanged. The Nasdaq fell less than 0.5% while the S&P 500 lost just 0.2%. Despite the relative quiet this week, stocks have staged a remarkable rally since hitting recent lows in the wake of the banking crisis just a couple weeks ago. The S&P 500 is up 4% and Nasdaq Composite has gained nearly 7%.
The market landscape is pretty interesting at the moment. Outside of the banking sector, stocks appear to be on solid footing. I’ve discussed in the past the S&P 500 being in a range of 3800 – 4200. We still seem to be in that range but with the end of quarter upon us and earnings season just a couple weeks away, I’m curious if we break out of that range one way or another. Within the banking sector itself, we’ve seen a lot of trading opportunities. Now, I’m looking for signs of less trading there and more long term investments, which might signal concerns have abated.
Looking at the market as a whole, the VIX has fallen back below 20. Oil is comfortably above $70/barrel. Yields on the benchmark 10-year are sitting a little above 3.5%, well off their peak. In many respects, asset prices are settling in and feel calmer following the banking crisis and before that, worries about interest rate hikes. The only caveat to that might be in the metals, where gold and silver, two traditional hedges against inflation, are trading near their 6-month highs.
Speaking of interest rates, without much economic data on the calendar this week, expectations for what the Fed will do when they next meet in May are a bit undecided. As of this morning, there is a 64% chance interest rates will be left alone at the next meeting. I’ll be watching to see if this number begins bouncing around at all following Friday’s Personal Consumption Expenditures (PCE) release. Then next week, despite markets being closed for Good Friday, the jobs report is scheduled for release.
Taking a look at individual stocks, Lululemon issued earnings after the close Tuesday and provided an upbeat outlook. Shares of the high end apparel maker are indicated higher by 16% in premarket. In the tech sector, Micron Technology
Yesterday, the company announced it is looking to split into six different companies. There would be new companies for: cloud computing; ecommerce; digital mapping; food delivery; logistics; and media entertainment. This may be a way for the company to diversify its risk and launch six separate IPOs. Shares of Alibaba jumped 14% Tuesday on that news.
Later this morning, we’ll get a look at Pending Home Sales. We’re getting into the time of year where people begin looking to move but with rates substantially higher than they were a year ago, it’ll be interesting to see if that causes a drag on sales. I’m also keeping an eye out for any end of quarter window dressing. There is always potential for movement at the end of a quarter as fund managers look to end on a high note. As always, I would stick with your investing plan and long term objectives. Have a good day.
tastytrade, Inc. commentary for educational purposes only.