Morning Mayhem Melts into Midday Momentum

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Revolution Trading Team

May 26th 2023 . 4 min read

Market Open 

Today, the market opened with cautious optimism as congressional leaders hinted at the possibility of a debt-ceiling agreement being reached in the coming days. Price action was initially hesitant, but as the day progressed, stocks gained steam. The futures market seemed to take a breath of relief before the opening bell, reflecting the overnight market’s anticipation of positive news.

What Happened In The Markets: Sector Shuffle and Stock Standouts

In today’s market, the regional banking sector found itself back on its feet, thanks in part to Western Alliance Bancorp’s (WAL) report of improving deposit growth. The SPDR S&P Regional Bank ETF (KRE) jumped 3.4%, while Western Alliance Bancorp soared 12%. Despite this rebound, regional banks are still down about 30% year-to-date, facing the possible implementation of new regulations and higher costs to attract deposits.

As for individual stocks, Microsoft (MSFT) and NVIDIA (NVDA) both reached new 52-week highs, with Home Depot (HD) leading the Dow Jones Industrial Average components, reversing yesterday’s loss and then some. On the other side of the spectrum, Merck (MRK) and Amgen (AMGN) lagged behind.

Earnings Reports – “The Story of Profits”

The world of business earnings is akin to a theater, where companies take turns on the stage, presenting their financial performances. In today’s act, Target (TGT) took the spotlight. They reported their earnings for the quarter, which is essentially how much profit they made. Surprisingly, they did better than what most people had predicted, which is always a good sign.

However, the story was not entirely rosy. They also gave an outlook for the next quarter (Q2), which wasn’t as optimistic. This cautious outlook could be due to a variety of reasons, one of them being a potential decrease in discretionary spending, which is when consumers have less money to spend on non-essential items. This announcement cast a shadow of uncertainty over their otherwise stellar performance.

But the drama of earnings season isn’t over yet. We still have major players waiting in the wings, ready for their turn on stage. Big consumer companies like Walmart (WMT) and TJX Companies (TJX) are scheduled to present their earnings later this week. Their performances will provide more insights into the consumer market and potentially set the tone for the sector’s performance for the coming months.

Economic Updates – “The Dance of Numbers”

In the realm of economic news, there are several important indicators that investors watch closely. They are like dance numbers in a ballet, each with its own significance, contributing to the overall performance.

Today, we saw the performance of Treasury yields, which are essentially the return you get for investing in US government bonds. They held steady, not moving up or down significantly.

Meanwhile, the price of oil and the value of the US dollar both went up. These are usually signs of increased economic activity and can signal a positive economic outlook.

As the day ended, market participants turned their attention to the upcoming economic data that’s due to be released. They’re looking out for four main indicators: Weekly Initial Claims, which is the number of people filing for unemployment benefits for the first time; the May Philadelphia Fed Survey, which measures the health of manufacturing in the Philadelphia region; April Existing Home Sales, indicating how the housing market is doing; and April Leading Indicators, which is a composite index designed to predict future economic activity. To learn more about how traders are taking advantage of the moves resulting from economic reporting, don’t miss Joe Rokop’s powerful webinar. In tonight’s presentation, Joe will discuss discuss the method he used to grow his small futures account from $10k to over $400k.

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Market Close – “Late-Day Surge Seals Success”

As the market closed, the major indices remained near their best levels of the session. The Dow Jones Industrial Average ended up 408 points at 33,420, the Nasdaq finished up 157 points at 12,500, and the S&P 500 closed up 48 points at 4,158.

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