Stocks take the path of least resistance with no pesky data in its way
(These are the market notes on today’s action by Mike Santoli, CNBC’s Senior Markets Commentator. See today’s video update from Mike above.) -No news, no government services, no problem for the stock market. -The lack of scheduled economic data today and tomorrow keeps investors in the dark on the latest labor trends and factory orders, but this simply leaves the market traveling its path of least resistance: Rotating in an upward grind, with the excitable semiconductor and “hot themes” of drone-tech and quantum computing providing the lift. -If anything, the absence of government data has added certainty to the outlook for a Fed rate cut in a few weeks, while arguably creating a few months of staticky macro readings that could allow investors to give the numbers a pass. This is the bright-side scenario of course, one that would require the recent wobbly action in consumer cyclicals and consumer-credit names to reverse or at least get no worse. -The buying frenzy in semis on a pileup of AI-procurement and partnership announcements has only become more intense. Memory-chip makers, disk-drive makers and semi-cap equipment names have caught the AI wave. Traders have been conditioned to assume the huge spending numbers will only get even bigger, the only mistake has been to fade the obvious reaction. NVDA is up a quarter-trillion in market cap this week after looking stalled-out las Friday. -The modest S & P 500 upside today comes against a sell-the-news response in Tesla after better-than-projected third-quarter deliveries. An initial pop in the stock, which has more than doubled in six months, took it close to its December all-time high. The angle of ascent should get some attention. The last two times the stock got up in this price zone in such a vertical fashion (November 2021 and December 2024), it came right as Nasdaq 100 rallies were about to culminate and then correct. Very small sample size but for what it’s worth. -The broader tableau of the market features a weak dollar, Fed trimming rates, the most profitable companies in history sending hundreds of trillion in motion through the real economy, earnings hanging in there, global indexes confirming the U.S. strength, Treasury yields at benign levels, extraordinarily low correlation among stocks and sectors restraining index volatility and – we are told – professional investors still not aggressively positioned into what normally (by mid-October) becomes one of the strongest parts of the calendar. -Market breadth again is so-so, broad index momentum has waned, the speculative froth keeps running fast, even if the index cooled enough in recent weeks to work off its extreme overbought status. It’s hard to nitpick the action, but before long it might be worth the effort.
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