Stocks Jump As Junk Slumps
Michael Kramer | Jun 30, 2020 04:27AM ET
It wasn’t the most vigorous trading session despite a 1% rally in the S&P 500. The real action came in the after-hours when it rallied another 50 or so basis points after Powells issued a statement ahead of his testimony for Congress. There was nothing new said, but still, the algo’s took the index up. It will give us a chance to find out if the market can advance much beyond 3050 or not. For now, the futures have been unable to advance beyond that level of resistance.
The 10-year yield fell below support at 63 basis point late yesterday, and I think that is a negative sign for the yields and potential the equity market. It likely suggests the 10-year drops to around 55bps.
I am a little bit concerned that the HYG and JNK ETF’s are trending lower as the yields are moving lower too. The falling ETF values indicate higher yields for the ETFs. That means spreads are widening, and that usually isn’t a good sign for equities.
Micron (NASDAQ:MU) reported better than expected results and gave better guidance, which was surprising to me. It wasn’t what I was expecting. For now, the stock has jumped to technical resistance at $52.75 and failed at the moment. We will see what happens during the normal trading session. This stock doesn’t have the greatest history of holding post-earnings rallies. Plus, $52.75 has been a tough level for some time.
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A bunch of other companies decided they were going to start pulling ads from Facebook (NASDAQ:FB) as well. The stock’s next significant level is at $222.
Tesla (NASDAQ:TSLA) looks as if it may getting ready for its next leg higher, potential to as high as $1200. The company is nearing profitably for the quarter, according to reports.
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