Market Reacts to $100 Billion Apple Surprise
Market strength continues as a strong showing by Apple and optimism about a rate cut drove another strong day.
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Strength in the Magnificent Seven MAGS, and Apple AAPL in particular, boosted the market on Wednesday. Apple jumped more than 5% following news that it was increasing its capital investment in the U.S. by $100 billion. This strength offsets the weakness in thousands of smaller stocks.
The Russell 2000 IWM lagged with a small loss. Breadth was around 5,400 gainers to 4,500 losers, which reflected the narrow strength. There continues to be quite a bit of speculative action in smaller stocks with a long list of names up more than 10% but there were quite a few earnings disappointments, such as Advanced Micro AMD, Disney DIS and Riven RIVN.
Talk about slowing employment, increased inflationary pressures and even stagflation has been building recently, but investors refuse to embrace the bearish arguments. Ironically, the poor jobs news turned out to be a positive catalyst as it boosted the chances of a dovish Fed and a rate cut at the September meeting.
The dip last Friday helped to relieve some of the overbought technical conditions, and that was all that was needed since there is such strong interest among dip buyers. It doesn’t hurt that the bears are still on the wrong side of this action and have to consistently reposition to avoid being run over.
There are a slew of small-cap earnings reports hitting, and there will be more tariff and trade news in the next few days, but there isn’t any significant economic data coming soon. All news is good news currently. The bears may call that irrational, but it isn’t stopping the positive price action.
Strong markets tend to stay sticky to the upside, and this is a very strong market.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
