NASDAQ Reaches New Heights as S&P 500 Shows Weekly Gains
The NASDAQ has achieved a new record closing value, with the S&P 500 also posting weekly gains, marking a notable moment in trading. Let’s turn to Jared Blickre from Yahoo Finance for more insights.
Tech Sector Drives Market Performance
Thank you, Josh. As you’ve mentioned, the NASDAQ is hitting record levels, primarily fueled by the technology sector, which is my top observation. A glance at the NASDAQ composite’s two-month candlestick chart reveals a strong upward trend that has persisted since around June 20th. While the NASDAQ has surged, the S&P 500 has remained relatively stagnant, managing a new record close yesterday and hitting an intraday high today, yet it seems to be trapped in a holding pattern. The market dynamics have been intriguing, with fewer stocks participating in the rally, which explains the S&P’s limited movement. Interestingly, smaller stocks and some previously popular meme stocks have shown significant recovery, with tech stocks gaining 2% for the week, followed closely by utilities.
Meme Stocks and Market Dynamics
Shifting focus to meme stocks, we have noted considerable activity. For instance, Palantir has surged by 8%, while Coinbase reached new highs, and Robinhood rose by 11%. Carvana’s performance this week was modest, up 1.1%. However, it is notable that Carvana, which once saw its stock price soar to $350 during the meme stock frenzy of 2021, experienced a staggering 99% decline, closing at $3.55 in December 2022. Remarkably, it has now managed to recover significantly, achieving a 100x increase from its lows. This exemplifies the current state of the market, where funds are actively seeking opportunities.
Factors Behind the Strength in Risk Assets
What’s driving the strength in risk assets like tech and meme stocks? The answer lies in global liquidity. Recent insights from Michael Howell highlight how central banks are influencing market liquidity. China began its extensive printing of money in September of last year, and its effects are now evident. When we analyze the S&P 500 alongside the global M2 money supply, we can observe distinct trends. Following a pandemic-induced surge and subsequent decline, the money supply has now surpassed levels seen earlier last year and is at its highest point since 2020. This influx of liquidity, combined with a weakened dollar, has created a favorable environment for risk assets.
Crypto Market Activity Overview
As we approach the weekend, let’s shift our attention to the cryptocurrency market. Over the past week, Bitcoin has seen a slight decline of 2%, while Ethereum has experienced a remarkable increase of 16%. If we examine a six-year chart of Ethereum, it appears poised to break out of a trading range, which could lead to further momentum if it does. Ripple is also making headlines, having tested and surpassed some previous highs, particularly those from 2018. After facing challenges from the SEC in 2020, Ripple’s resurgence has been noteworthy, indicating a robust recovery in the crypto space.
Looking Ahead: Earnings and Market Trends
As we look to the upcoming week, earnings reports will be at the forefront of my observations. Additionally, I will keep an eye on commodity prices, especially for platinum and palladium, as well as fluctuations in the dollar. The direction of the dollar remains uncertain, and we will have to wait and see how it unfolds.
Conclusion
Thank you, Jared, for your insights. The current market dynamics and the shifting landscape in both traditional equities and cryptocurrencies will be important to monitor as we move forward.
