Apple, Inflation, Fed: Events Next Week Could Dominate Trading in June


June is starting, with major catalysts over the next eight sessions.

First is Apple (AAPL). The smart-phone giant has mostly been excluded from the AI boom, but that could change with analysts widely expecting CEO Tim Cook to unveil new functionality in his speech at 1 p.m. ET on Monday, June 10. Could it spur an upgrade cycle?

Wednesday, June 12, is another big day. It begins with the Consumer Price Index (CPI) inflation at 8:30 a.m. The Federal Reserve announces monetary policy and its outlook for interest rates (“dot plot”) at 2 p.m. Both events could have major impacts on the stock market, potentially confirming hopes that the post-pandemic inflationary spiral is fading.

This week is also busy. The European Central Bank is expected to cut interest rates on Thursday and U.S. jobs data is on Friday. Still, next week’s catalysts could be more important because they most directly impact domestic borrowing costs.

Charting the Market

The S&P 500 rose 4.8 percent in May, rebounding from April’s pullback. Traders could see some potentially bullish patterns on the daily chart.

First, the index probed below its low from two weeks prior but rebounded. It was reminiscent of the tight price action in between November and March as stocks pushed to record highs.

Second, Friday’s session featured a higher high and higher low than Thursday. The resulting bullish outside candle can suggest that buyers remain in control.

Third, the index remained above its 21-day exponential moving average.

S&P 500, daily chart, showing key indicators and events.

Growth vs Value

While last month saw AI continue to boost technology stocks like Nvidia (NVDA), there were signs of rotation away from growth names.

Software companies were one weak spot — especially after (CRM) missed revenue estimates on May 29. Smaller peers like Paycom Software (PAYC), Dayforce (DAY) and MongoDB (MDB) also fell.

Utilities, on the other hand, led the market for a second straight month as investors looked for AI to boost demand for electricity. Traditional retailers like Deckers Outdoor (DECK), Best Buy (BBY), Foot Locker (FL) and Ralph Lauren (RL) also climbed on strong quarterly results.

Big Movers in May

Top Gainers in the S&P 500 Last Month
First Solar (FSLR)+54%The maker of solar panels jumped as AI fueled demand for clean energy. Chinese competitors also shunned price wars.
Deckers Outdoor (DECK)+34%The footwear maker jumped to another record high after results beat estimates on strong demand for its UGG and HOKA brands.
Vistra (VST)+31%The utility company beat earnings and revenue estimates amid strong electricity demand.
HP (HPQ)+30%The computer hardware maker beat estimates and said AI will contribute to growth in coming quarters.
Moderna (MRNA)+29%The drug maker reported better-than-expected quarterly results and rallied after Barron’s reported it’s working with Pfizer (PFE) on a potential avian flu inoculation.
Source: TradeStation Data
Top Decliners in the S&P 500 Last Month
EPAM Systems (EPAM)-24%The software company forecast weak earnings and revenue because macro conditions failed to improve as hoped.
Paycom Software (PAYC)-23%The provider of HR software guided revenue and EBITDA below consensus.
Dayforce (DAY)-19%The provider of HR software initially held its ground after beating estimates, but followed peers lower at the end of the month.
Global Payments (GPN)-17%The financial processor kept sliding after failing to lift a cautious outlook from earlier in the year.
Expedia (EXPE)-16%The travel stock lowered its guidance amid weak demand at its VRBO vacation-rental business.
Source: TradeStation Data

Sector Watch

Real Estate+5.1%
S&P 500+4.8%
Consumer Staples+2.5%
Consumer Discretionary+0.2%
Source: TradeStation Data

Key Economic Events in May

Below are some key economic events from last month.

  • Jobs data misses estimates: U.S. employers added 175,000 jobs in April, below the 243,000 estimate. Wage growth also missed forecasts and unemployment was higher than expected. (5/3)
  • Inflation unexpectedly cools: The Consumer Price Index (CPI) rose 0.4 percent in April, 0.1 percentage point less than projected. Lower vehicle prices helped drive the trend. Year-over-year core inflation was up 3.6 percent, the smallest increase since April 2021. (5/15)
  • Retail sales fail to grow: Retail sales were unchanged in April, missing estimates for a 0.4 percent increase. Auto sales fell almost 1 percent, contributing to most of the weakness. (5/15)
  • Housing data softens: Most of the big housing numbers missed estimates last month: housing starts, building permits, existing-home sales and new-home sales. The National Association of Realtors also said the inventory of available homes increased by 16 percent from a year before. (Various dates)

What Experts Are Saying

Below are some noteworthy commentaries:

  • Companies are less worried about inflation, according to FactSet. Just 219 members of the S&P 500 mentioned inflation in their most recent quarterly conference calls. The research firm said that total has declined for seven straight quarters. (5/17)
  • Piper Sandler said Microsoft’s (MSFT) launch of AI-powered Copilot Plus PCs could drive a computer-hardware upgrade cycle. Suppliers including Qualcomm (QCOM), Intel (INTC), Dell Technology (DELL), HPQ and Micron Technology (MU) were considered potential beneficiaries. (5/21)
  • AI “will power the stock market for the next decade,” John Chambers told CNBC. He expects most venture capital to focus on AI this year. Chambers, former CEO of Cisco Systems (CSCO), now runs the venture firm JC2 Ventures. (5/22)
  • UBS raised its price target on the S&P 500 from 5,400 to 5,600, citing improved corporate earnings. It’s now the most bullish projection among major Wall Street firms, according to Reuters. (5/28)
  • The Federal Reserve needs to cut interest rates because businesses are reducing plans to hire, Ian Shepherson of Pantheon Macroeconomics told CNBC. He added that the “framework for inflation … is completely transformed from what it was in ’21 and ’22.” (5/31)

Popular Futures Contracts in May

S&P 500 E-Mini (@ES)ESM24 (Jun)6/21/24ESU24+4.6%
Nasdaq-100 E-Mini (@NQ)NQM24 (Jun)6/21/24NQU24+5.7%
Dow Jones E-Mini (@YM)YMM24 (Jun)6/21/24YMU24+2.2%
Russell 2000 E-Mini (@RTY)RTYM24 (Jun)6/21/24RTYU24+4.8%
Source: TradeStation Data

Newsworthy Events This Month

DateEventWhat to Watch For
Fri 6/7Non-farm payrollsHiring and wage trends in May
Mon 6/10Apple’s World Wide
Developers Conference
Potential AI news
Wed 6/12
8:30 a.m. ET
Consumer price index (CPI)Inflation trends
Wed 6/12
2 p.m. ET
Federal Reserve meetingNews on monetary policy, including
interest-rate forecasts.
Tue 6/18Retail salesThe strength of consumer spending

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