The End of Easy Money Days?
Making money has for six weeks been as easy as I can remember, and this morning that could all change. Also, let's chart the S&P, and preview a critical day of Macro data.
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I suspect that some, or perhaps even most, investors really have no idea how crucial the day ahead is to their short-term financial future.
The day at hand? Thursday, May 15. The hour? That time we refer to as the zero-dark hours. Current situation? Asian stocks have traded mixed to lower. European stocks have opened on weakness. U.S. equity index futures are trading in the red. Not deeply in the red, but they are lower. U.S. Treasury debt securities have rallied slightly overnight, drawing capital from equities in a reversal of what we have seen week to date. I still see the U.S. Ten-Year Note paying 4.51% after going out at 4.54% last night and 4.48% the night prior to that.
Since the president's "Liberation Day" announcement, U.S. stock markets, the S&P 500 in particular, went through a rapid descent into textbook bear market territory followed by one of the most ferocious short-term rallies that we have seen in recent years, completely erasing all trade-war or tariff-related losses. As of Wednesday's closing bells down at 11 Wall St. and up at Times Square, the S&P 500 stood up 0.19% year to date, while the Nasdaq 100 was up 1.46% for 2025. Only a couple of weeks ago that would have seemed unthinkable.
The focus this week, after a surprising weekend agreement by the U.S. and China to thaw out their trade war, has been on a dizzying series of large deals made that benefit a number of U.S. corporations as the president and his team tour the Middle East. Technically, making money in this market for about six weeks has been as easy as any time I can remember in my long career. This morning, that condition, perhaps ... returns to a more normal environment, where signals become mixed. We soon shall find out.
Marketplace
U.S. equities paused on Wednesday. Believe me, we needed a pause. I hate nothing more than a one-way marketplace, even if I do well for a short while. Better for the long run, for there to be a return to a give and take marketplace with some ebb and flow that at least slows down to respect both the fundamentals and the technicals.
On Wednesday, the S&P 500 gained just 0.1%, and the Nasdaq Composite gained 0.72%, propped up again by the Tech space which itself was propped up by the semiconductors. On Wednesday, the Dow Jones U.S. Semiconductor Index ran 2.34% as Arm Holdings ARM, Advanced Micro Devices AMD and Nvidia NVDA gained 5.3%, 4.7% and 4.2% respectively.
This time, however, tech could not carry the broader market. The Russell 2000 surrendered 0.88%, as the S&P Small Cap 600 gave up 1.05% and the Dow Transports backed 0.16%. Just three of the 11 S&P sector SPDR exchange-traded funds ended the day on Wednesday in the green, with growth out in front. The Tech XLK and Communication Services XLC were the leaders, while Health Care XLV took another drubbing.
Seeking Confirmation
Breadth was mixed on Wednesday. Losers beat winners by a 2-to-1 margin at the NYSE and by a rough 7 to 4 at the Nasdaq. Here's where it gets more than a little odd. Advancing volume took a 41.6% share of composite NYSE-listed trade as aggregate volume across those NYSE-listings decreased by 5.1% on a day over day basis. Negative, but truly without any conviction behind it.
Now, advancing volume took a 64.4% share of composite Nasdaq-listed activity despite the 7-4 victory by the losers. On top of that, aggregate trading volume across Nasdaq-listings ramped 27.1% higher on a day-over-day basis. What the heck does that mean? It means the market needed a pause and took one. It means that portfolio managers were as confused as anyone else and ran into some uncertainty in the allocation of capital. That could create some profit-taking type activity on Thursday morning.
Readers will see in this daily chart of the S&P 500 that the index, after putting a new "Day One" breakout to the tape as recently as Monday, has continued to rise, but on reduced activity. In order to produce a "Confirmation Day" of this breakout, my readers understand that there must be a visible pause, or even minor reversal before portfolio managers. after gathering themselves, decide to continue to chase stock prices higher. Or not.
That's where we are on Thursday morning. Relative strength remains very strong but continues to exist just a notch below what we would consider to be technically overbought territory. The daily Moving Average Convergence Divergence, below the chart, continues to flash a very bullish posture with the 12-day exponential moving average riding well above the 26-day exponential moving average, and with those two moving averages along with the histogram of the 9-day exponential moving average now well above the "zero-bound."
In a best-case scenario for equity markets, the S&P 500 could give up some ground, and set the table for that day of confirmation, without testing its 200-day simple moving average (the red line) from above. That way, portfolio managers do not feel pressured to reduce long-side exposure en masse and risk managers do not feel pressured to prove their worth to their employers by pressuring portfolio managers.
Macro Attack
What will impact the market's ability to deliver the "down, but not too down" day that we crave for Thursday? The Macro. Traders and investors will have to traverse an environment on Thursday that will simply be overrun with U.S. domestic macroeconomic data. The fun kicks off at 8:30 a.m. ET when the Bureau of Labor Statistics publishes producer prices for April and the Census Bureau publishes April retail sales.
About forty-five minutes after that, the Federal Reserve Bank will post data on April industrial production and capacity utilization. Forty-five minutes after that report hits the tape, the Census Bureau will post March business inventories. While all of these data-points are crossing the tape, regional manufacturing surveys for May will be released by both the New York and Philadelphia Feds.
Last, but not least, Fed Chair Jerome Powell will speak this morning from the Second Thomas Laubach Conference in Washington. Readers can bet their bottom dollar that the high-speed, keyword-reading algorithms that control price discovery in this modern era will be all over this speech.
Bad News for UNH...
Sorry, UnitedHealth Group UNH shareholders: On Tuesday, UNH CEO Andrew Witty suddenly resigned for personal reasons. On Wednesday evening, news broke that the company is under investigation by the Department of Justice for possible Medicare fraud. According to the Wall Street Journal, the probe is focused on the company's Medicare Advantage business. The stock is down more than 6% overnight and down more than 52% since its April 11 high.
Noteworthy on Wednesday
- Advanced Micro Devices announced a new $6 billion share repurchase program on Wednesday. This is in addition to the $4 billion left in the company's current repurchase authorization, bringing planned purchases up to $10 billion.
- Qatar Airways agreed to purchase between 160 and 210 passenger aircraft, mostly 787 Dreamliners and 777-9's from Boeing BA in a deal valued at more than $200 billion.
- Defense contractor Parsons Corporation PSN won 30 projects in commercial agreements inside Qatar estimated to be worth as much as $97 billion.
- GE Aerospace GE and Qatar Airways announced an expansion of their partnership with new deals signed for the delivery and continued service of more than 400 jet engines, most GE9X and GEnx engines. This is in addition to the orders for 188 GE9X and 124 GEnx engines already in place.
Economics (All Times Eastern)
08:30 - Initial Jobless Claims (Weekly): Expecting 229K, Last 228K.
08:30 - Continuing Claims (Weekly): Last 1.879M.
08:30 - Retail Sales (Apr): Expecting 0.0% m/m, Last 1.5% m/m.
08:30 - Core Retail Sales (Apr): Expecting 0.3% m/m, Last 0.6% m/m.
08:30 - PPI (Apr): Expecting 0.2% m/m, Last -0.4% m/m.
08:30 - Core PPI (Apr): Expecting 0.3% m/m, Last -0.1% m/m.
08:30 - PPI (Apr): Expecting 3.0% y/y, Last 2.7% y/y.
08:30 - Core PPI (Apr): Expecting 3.3% y/y, Last 3.3% y/y.
08:30 - Empire State Manufacturing Index (May): Expecting -7.4%, Last -8.1%.
08:30 - Philadelphia Fed Manufacturing Index (May): Expecting -9.2%, Last -26.4%.
09:15 - Industrial Production (Apr): Expecting 0.1% m/m, Last -0.3% m/m.
09:15 - Capacity Utilization (Apr): Expecting 77.8%, Last 77.8%.
10:00 - Business Inventories (Mar): Expecting 0.2% m/m, Last 0.2% m/m.
10:00 - NAHB Housing Market Index (May): Expecting 40, Last 40.
10:30 - Natural Gas Inventories (Weekly): Last +104B cf
The Fed (All Times Eastern)
08:40 - Speaker: Federal Reserve Chair Jerome Powell.
2:05 p.m. - Speaker: Reserve Board Gov. Michael Barr.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: DE (5.62), WMT (.58)
After the Close: AMAT (2.31), TTWO (1.09)
At the time of publication, Guilfoyle was long AMD, NVDA equity.
