On today's episode of Morning Brief, Yahoo Finance's Seana Smith and Madison Mills cover some of the biggest stories as the holiday-shortened trading week...
hold near their record highs achieved last week Miller Tabak Managing Director and Chief Market Strategist Matt Maley says that the market rally signals that"investors aren't all that confident about anything outside of the AI phenomenon. And we haven't seen the big broadening out of earnings outside of the AI phenomenon."has indicated optimism about potential interest rate cuts, stating that one cut in December is"reasonable.
Setting a promising path for inflation and momentum surrounding the A I trade plus the great rate debate. According to the latest report from China's National Bureau of Statistics, the data also showing investment in the housing sector for the first five months of the year fell more than 10% during the last year.Let's get right to our top story this morning.
And the other key thing that has been at work here has been earnings revisions have not been revised down by nearly as much as they normally are.You're looking at five names that have seen about 38% growth in their, in their earnings estimates.We know those estimates usually come lower. This is not to say that history is a definite indicator and we're gonna get the 600 days of the S and P 500 trading above a 420 pe but I did think that's a fruitful reminder that just because things are expensive, doesn't mean that we're gonna just fall off a cliff can trade at these levels for a while.It really depends on if we deliver.
If that's where you think we're headed, there's there's more to come in that aspect, higher for longer, maybe higher, higher, higher evaluations for longer evaluations for longer a great new phrase from Josh Shafer.Speaking of the Federal Reserve Minneapolis Fed Reserve President Neil Kashkari, now saying it's reasonable to predict a December rate cut.
the markets really still, you know, felt positive about, you know, the prospect of, you know, any cuts at all.So I don't see a lot more exuberance once the fed starts to actually cut.We're not expecting a major pullback or anything like that. So, you know, thinking in particular of kind of the infrastructure that's needed to maintain A I and as that is adopted broader across various industries, we think that that could actually be beneficial across more than just the tech sector.
Some of the weakness there and maybe what ultimately is going to be needed in order to prop up the economy, maybe in the longer term, it's so critical, particularly because the government has already been pushing a lot of stimulus into the housing sector to the tune of $350 billion.
But I think, you know, as we go into like the second half of this year, um is it gonna get any worse?I think we're, we're looking at a good point now for uh global demand heading into the summer. Europe's looking pretty good, even China in terms of um uh gasoline demand and uh jet demand is looking very good.
Now, this is all stemming from what has played out at auto desk here over the last several months, they did have an internal probe regarding some accounting questions into the company. Yeah, and this comes as the stock under a little bit of pressure, at least they're down about 3.5% year to date over the past year.
They cited the company's restructuring efforts and new product cycle and interestingly citing the timing here, Shana upcoming appliance upgrades as a potential boon, which is interesting to me given what we've been saying about the struggles of the housing market, but it is still cyclical, right. You can see it at least for today or at least where it closed on Friday closed just above 87 bucks a share.
But as we take a look at the major averages, we are looking at a bit of a mixed picture here at the open.You also have the S and P off about 1/10 of a percent here.But it's interesting to look at the amount of pressure on the S and P equal weighted index down 7/10 of a percent even more than the broader.
And so just on a technical level, I am not concerned about this market unless 6500 goes in the equal weight at S and P 500 index.Here is the NASDAQ versus the Dow over the last month and pretty striking.And on a year to date chart, you can see both are positive, but the NASDAQ has really just had a much better year of it.
Big Tech has been driving this record setting rally that we have seen play out, especially some of the excitement in the markets last week. Well, you know, you never like to see a narrow rally having said that uh you know, this time last year, we had a very similar narrow rally and yet it kept going for another month and a half and it really didn't see a pullback until we got to August.
So we heard some people talk about, you know, using a barbell strategy, which is something we've heard a lot in the past, but this seems to make a little bit of sense.I mean, NVIDIA, uh it is not an expensive stock if you look at it on a, on a long term basis, but you getting 5% in, in cash right now, which is outperforming, as I mentioned, I mean, you know, the S and P equal weight, uh index of Russell 2000 is down on the year.
Uh, you know, that, you know, in other words, what reason would they have to cut rates more, uh, more quickly?Uh, because that there would be a negative impact for earnings and an expensive market.So we, you know, we're definitely as we move into the summer months, we are, uh, you know, have some concerns out there and that's why I think some, a little bit more cash on hand is not a bad, is not a bad investment idea.
Again, some of that has to do with the, the liquidity in the marketplace and the market keeps going higher.Uh the, the situation in the Middle East has been going on for 778 months now and it hasn't had an impact.It's only been escalating very gradually, but it keeps escalating. But you know, it, it gives you a little bit easier to sleep at night when you have some of these things going on over there and you're actually paid to wait and actually paid uh to have a little bit of cash.All right, Matt Maley, always great to talk to you.Well, coming up a deep dive into Tesla's growth story, we are going to talk to one analyst on why he sees sentiment improving for the EV giant in the coming months.Tesla shares moving to the upside here of nearly 1.
Because the ultimate question I think for investors is going to be that will these vehicles generate the same type of excitement we've seen for other high volume vehicles in the past, such as of course the model three and the model Y if the answer to that question is yes, we do see scope for sentiment to improve as the focus would then turn to these new products driving additional growth uh versus which is really needed just given some of the demand, uh headwinds that both electric vehicles...
When you think about large car companies as they grow, there does need to be different design languages, even different sub brands in those vehicles to really appeal to a wider audience uh around, around the world. Uh and of course, the price points relative to the content you're getting, it's all ultimately all about the value for dollars.Um to really undersee whether you know, investors and consumers, of course, can get really excited about new vehicles.So it is a very significant focal point here over the next few months.
One being that we do think that they could probably launch perhaps the cheapest and lowest cost Robo taxi platform out there, not only from a hardware cost perspective, but also from an operating cost and network cost perspective. But if you can turn the story into a the new evs we talked about and B if the company can craft a credible autonomous vehicle deployment plan that leverages their advantages, we think there is scope for sentiment to improve here in the next few months.
But recently, there's been a strategy shift from Pixar when it comes to the types of films that they not only that they're producing, but how many films they plan to show in theaters? So of course, we, we've seen the strategy fail before, I mean light year that was a sequel in 2022 that really did not perform well at all.And also a big emphasis on the box office.And it is interesting just how many people went out and saw inside out too and really the excitement that they were able to build surrounding this release.
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