To The Moon

The S&P 500 $S&P 500(.SPX)$ rallied to a new all-time intraday high of 6480 in early trading before finishing today’s session at a record closing high of 6467 up 0.3%.  The tech heavy NASDAQ $NASDAQ(.IXIC)$ closed with a modest gain of 0.1%.  The DJIA gained just over 1% while the Russell 2000 outperformed closing nearly 2% higher signalling a broad market rally with a rotation away from Tech into the lagging blue chip (DOW $Dow Jones(.DJI)$ ) and small cap stocks (Russell 2000 $iShares Russell 2000 ETF(IWM)$ ).  The Russell jumped 3% in the previous session and this was the best 2-day rally in small caps since early April (after Liberation Day). The VIX $Cboe Volatility Index(VIX)$ closed at 14.5.

80% of stocks closed higher

24 of the 30 stocks in the Dow closed higher today with UnitedHealth up 4% and Nike, Merck and Sherwin-Williams all more than 3% higher.  Walmart fell 2.5%.

1630 of the Russell 2000 stocks closed higher today.

418 of the 500 rose but 12 of the biggest 20 fell - weighing on the index.

Biggest gainer in S&P 500 was Paramount Skydance $Paramount Skydance Corp(PSKY)$ jumping 37%.  Last week, Skydance Media and Paramount Global completed a drawn-out merger process. The ink was barely dry when the newly merged company clinched a blockbuster $7.7 billion deal with TKO Group to broadcast its highly coveted UFC fights.

Of the BATMMAAN stocks Apple $Apple(AAPL)$ continued higher gaining 1.6% joined by Amazon $Amazon.com(AMZN)$ up 1.4%.  The other six closed in the red Meta $Meta Platforms, Inc.(META)$ , Microsoft $Microsoft(MSFT)$ and Broadcom $Broadcom(AVGO)$ all more that 1% lower. 

Apple late last week announced that it will invest an additional $100 billion in U.S. manufacturing, bringing its four-year domestic commitment to $600 billion.

This move was seen as a strategic response to proposed 100% tariffs on semiconductor imports—and crucially, Apple received an exemption due to its U.S.-based investment.

One of the key drivers seems to be the mooted inflation and revised jobs numbers which have accelerated expectations of a rate cut in September of at least 25bps.  The CME FedWatch Tool also shows a 6% chance of a 50bps cut, a move that US Treasury Secretary Scott Bessant echoed in a interview today.  He called for a series of cuts stating that rates should be 150bps lower by now.  The FedWatch tool puts 125bps of cuts by December a distinct possibility.

Amongst stocks reporting today Cisco $Cisco(CSCO)$ fell 1.4% despite beating forecasts. 

·       Applied Materials, Deere and Ross Stores on Thursday. 

·       Other major retailers next week – TJX, Lowe’s, Target, Walmart, Kohl’s, Guess, Dollar Tree, GAP, Abercrombie & Fitch.

We are nearly through the US reporting season and one thing has become very clear that is those companies that are reporting well are not being rewarded in their share price appreciation as much as normal due to the uncertainty and risks in the market particularly around tariff, with tariffs and uncertainty being cited by most companies as part of their earnings call to investors.  Maybe a case of buy the rumour and sell the fact.

Seasonality

Since 1945, Q3 is historically the worst quarter for the S&P 500, with September being the worst month and the only month since WWII that the average return is negative at -0.7%.

With the big April sell off we may have had our fair share of market pullbacks this year – time will tell. Definitely key indicators such as market breadth (the Russell 200), new highs versus new lows, the VIX (14.5) and Equity only put call ratio (0.6) as well as the index itself are all very bullish.

Over the past 10 years seasonality in Australia is very similar to the US. $S&P/ASX ALL ORDINARIES(XAO.AU)$

Biggest gainers in ASX yesterday were Mineral Resources $MINERAL RESOURCES LTD(MIN.AU)$ up 12% and Digital X $DIGITAL X LTD(DCC.AU)$ up over 8%.  Commonwealth Bank $COMMONWEALTH BANK AUST(CBAPI.AU)$  rose 1.1% yesterday after it took a rare 6.3% dive on Tuesday despite reporting a relatively sound FY25 result. Up 35% in the past twelve months though, investors shouldn't be too upset by the pullback. 

ENDS

Disclaimer: 

This commentary is presented by Tiger Brokers (AU) Pty Limited and is for information only. It does not constitute financial advice. Investing involves risk. You should always seek professional financial advice before making any investment decisions.

About Greg Boland

Greg Boland is the Chief Strategy Officer for Tiger Brokers. His more than 35 years of specialist experience in capital markets include exchange management, investment advisory management, surveillance and risk and compliance, operations, and governance, and he is an authority in trading systems and methodologies (including online), exchange-traded equities and derivatives, equity options, index futures and options, and financial futures.

About Tiger Brokers in Australia

Tiger Brokers (Nasdaq: TIGR), founded in 2014, is a leading online brokerage firm with a focus on redefining global investing with technology for the next generation. Our unwavering mission of helping everyday Aussies, from beginners to experts, take full control of their investing journey and bringing our local knowledge and industry-leading share-trading platform to every investor.  Currently, Tiger Brokers serves over 10 million users and more than 2 million account holders worldwide on our flagship platform Tiger Trade, with 69 licenses and qualifications in different markets. In 2019, the company was listed on Nasdaq as UP Fintech Holding Limited under the ticker TIGR. For more information about Tiger Brokers, please visit https://www.tigerbrokers.com.au