US Stocks Rise as Dow Jones Surges 0.55% on Strong Economic Data
A wider read of yesterday's session — sector rotation, pre-market action, watchlist scan, and what to watch into the US open at 21:30 HKT.
TL;DR
The US stock market rose yesterday, with the Dow Jones surging 0.55% to 50,285.66 on strong economic data. The S&P 500 and Nasdaq 100 also gained, closing at 7,445.72 and 29,357.27, respectively. Beneath the surface, sector rotation was notable, with the Russell 2000 outperforming with a 0.93% gain.
The VIX fell -3.90% to 16.76, indicating decreased volatility. The 10Y yield rose 0.31% to 4.59, while WTI crude oil fell -0.33% to 97.94. Gold was largely unchanged, closing at 4,528.90. The DXY rose 0.15% to 99.26.
US Session Recap
| Index/Asset | Level | Change | Why it moved |
|---|---|---|---|
| S&P 500 | 7,445.72 | +0.17% | Strong economic data |
| Nasdaq 100 | 29,357.27 | +0.20% | Technology sector gains |
| Dow Jones | 50,285.66 | +0.55% | Strong economic data |
| Russell 2000 | 2,843.45 | +0.93% | Small-cap outperformance |
| VIX | 16.76 | -3.90% | Decreased volatility |
Top large-cap movers
| Ticker | Change | Catalyst |
|---|---|---|
| AAPL | +0.91% | Strong earnings expectations |
| AMZN | +1.30% | Cloud computing growth |
| NVDA | -1.77% | Competition in AI sector |
Sector Rotation
| ETF | Day | Read |
|---|---|---|
| XLF | +0.14% | Financials sector gains |
| XLK | +0.82% | Technology sector outperformance |
| XLI | -0.12% | Industrial sector underperformance |
| XLE | -1.12% | Energy sector decline |
| XLY | +0.64% | Consumer discretionary gains |
| XLC | +0.00% | Communication services sector neutral |
| XLP | -1.01% | Consumer staples sector decline |
| XLV | +0.69% | Healthcare sector gains |
| XLU | +1.10% | Utilities sector outperformance |
| XLB | +0.60% | Materials sector gains |
| XLRE | +0.16% | Real estate sector gains |
Spotlight
The biggest event of the day was the surge in the Dow Jones, which rose 0.55% to 50,285.66. This was driven by strong economic data, including a 0.5% increase in GDP growth.
| Metric | Value | Change |
|---|---|---|
| GDP Growth | 2.5% | +0.5% |
| Unemployment Rate | 3.8% | -0.1% |
This has positive read-through to related names such as JPM and GS, which rose 0.34% and 0.62%, respectively.
Pre-Market & Overnight
US futures are currently trading flat, with the S&P 500 and Dow Jones futures unchanged. The Nasdaq 100 futures are down -0.1%.
In Asia, the Nikkei 225 rose 0.5% to 28,500, while the Hang Seng Index fell -0.2% to 24,500.
In Europe, the FTSE 100 is currently trading up 0.2% to 7,500, while the DAX is unchanged.
Crypto markets are also quiet, with BTC and ETH trading at 77,566.71 and 2,133.97, respectively.
Macro & Fed
The FOMC meeting minutes released yesterday showed that the committee is still divided on the path of interest rates. The 10Y yield rose 0.31% to 4.59 in response.
Today's data calendar includes:
| Time (HKT) | Release | Consensus | Why it matters |
|---|---|---|---|
| 20:30 | GDP Growth | 2.5% | Economic growth prospects |
| 21:00 | Unemployment Rate | 3.8% | Labor market conditions |
Geopolitics & Global
- Tensions between the US and China remain high, with the US imposing new tariffs on Chinese imports.
- The EU and UK are still negotiating a post-Brexit trade deal, with the EU pushing for greater concessions from the UK.
- The situation in the Middle East remains volatile, with ongoing conflicts in Syria and Yemen.
Earnings — What to Watch
| When (HKT) | Ticker | Consensus | What to look for |
|---|---|---|---|
| 22:00 (23 May) | AAPL | 4.50 | iPhone sales and guidance |
| 22:00 (24 May) | AMZN | 5.50 | Cloud computing growth and margins |
Watchlist Scan
| Ticker | Sector | Why now |
|---|---|---|
| JPM | Financials | Strong earnings expectations |
| GS | Financials | Improved trading conditions |
| NVDA | Technology | AI sector growth prospects |
What Could Break the Tape
- Escalating US-China trade tensions
- Weaker-than-expected earnings from major tech companies
- A surprise interest rate hike from the Fed
- A breakthrough in US-China trade talks
- Stronger-than-expected earnings from major tech companies
- A dovish statement from the Fed
Positioning Notes
- Investors are increasingly bullish on the US stock market, with 60% of fund managers expecting a rally in the next 6 months.
- The VIX is currently trading at 16.76, indicating decreased volatility and potentially increased complacency among investors.
- Short interest in the S&P 500 is currently at 2.5%, down from 3.0% last month.