Markets waver as Nvidia becomes the # 1 stock in market cap

Dow edged up 56, advancers over decliners 4-3 & NAZ inched up 5 to barely extend its winning streak to 6 consecutive days.  The MLP index was about even in the 278s & the REIT index was up about 1  to 375.  Junk bond funds drifted lower & Treasuries were purchased which lowered yields.  Oil gained 1+ to the 81s (6 week high) & gold rebounded 17 to 2346 (more on both below).

Dow Jones Industrials 

Optimism is high on the stock market at the midpoint of the year.  Investors are the most bullish they have been since Nov 2021, according to the global fund manager survey, or FMS, released from Bank of America Securities.  Not only are portfolio managers not anticipating a recession, but they are also betting big on equities — especially the “Magnificent Seven.”  Cash levels are at a 3-year low.  All appears to be well on the markets front.  Halfway thru 2024, the S&P 500& NAZ are each at records.  The broad market index is now a stone's throw away from 5500.  “June FMS sentiment is at the most bullish level since Nov′21,” wrote Bank of America investment strategist Michael Hartnett.  “Our broadest measure of FMS sentiment, based on cash levels, equity allocation, and economic growth expectations inched higher to 6.03 from 5.99 last month.”  Still, that optimism has some investors concerned a reversal is on the way.  In Nov 2021, the last time investors were this bullish, the S&P 500 capped off a strong year, advancing more than 26%.  However, the following year, in 2022, the broader index slumped more than 19%, driven by the Federal Reserve starting to raise interest rates, which sparked a correction in large-cap tech stocks.  Investors are concerned about the potential for greater volatility in the 2nd ½ of 2024.  The fund manager survey shows inflation fears have eased in investors' minds, though it remains the top concern, while concerns over geopolitical risks & the US presidential election have grown.  Inflation is the #1 risk on investors’ minds, according to 32% of investors, down from 41% in May, followed by geopolitics (22%, up from 18%) & the presidential election (16%, up from 9%).

Investors are the most bullish since November 2021, widely followed survey shows

Nvidia (NVDA) long known in the niche gaming community for its graphics chips, is now the most valuable public company in the world.  Shares of the chipmaker climbed 3.2% today, lifting the company’s market cap to $3.33T, surpassing Microsoft (MSFT), a Dow stock.  NVDA shares are up more than 170% so far this year & went a leg higher after the company reported first-qtr earnings in May.  The stock has multiplied by more than 9-fold since the end of 2022, a rise that’s coincided with the emergence of generative artificial intelligence.  NVDA has about 80% of the market for AI chips used in data centers, a business that’s ballooned as others have raced to snap up the processors needed to build AI models & run increasingly large workloads.  For the most recent qtr, revenue in NVDA's data center business rose 427% from a year earlier to $22.6B, accounting for about 86% of the chipmaker's total sales.  The stock rose 4.60.

Nvidia passes Microsoft in market cap to become most valuable public company

The Food & Drug Administration approved Merck's  (MRK) new vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses & a lung infection called pneumonia.  MRK's shot, called Capvaxive, specifically protects against 21 strains of that bacteria to prevent a severe form of pneumococcal disease that can spread to other parts of the body and lead to pneumonia.  It's the first pneumococcal conjugate vaccine designed specifically for adults & aims to provide broader protection than the available shots on the market.  Healthy adults can suffer from pneumococcal disease.  But older patients & those with chronic or immunocompromising health conditions are at increased risk for the illness, especially the more serious or so-called “invasive” form.  Invasive pneumococcal disease can lead to meningitis, an infection that causes inflammation in the area surrounding the brain & spinal cord, & an infection in the bloodstream called bacteremia.  “If you have chronic lung disease, even asthma, you have a higher risk of getting sick with pneumococcal disease, & then being in the hospital, losing out on work,” Heather Platt, MRK's product development team lead for the newly cleared vaccine, said.  “Those are things that have a real impact on adults and children, their quality of life.”  Around 150K US adults are hospitalized with pneumococcal pneumonia each year, Platt said.  Death from the more serious form of the disease is highest among adults 50 & above.  The stock was up 54¢.

FDA approves Merck pneumococcal disease vaccine designed for adults

Gold prices edged higher after softer-than-expected US retail sales data cemented hopes that the Federal Reserve will reduce interest rates this year, sending the $ & Treasury yields lower.  Spot gold was up 0.4% at $2329 per ounce & US gold futures settled 0.8% higher at $2346.  Weaker-than-expected retail sales data brought the $ lower, & at the same time, yields backed off, so that’s providing some upside to gold prices.  US retail sales rose 0.1% last month, the Commerce Dept's Census Bureau said.  The forecast was for retail sales gaining 0.3% in May.  Fed Bank of New York Pres John Williams said interest rates will come down gradually over time, but he declined to say when the central bank can begin easing monetary policy.

Gold Gains as Soft U.S, Data Lifts Fed Rate Cut Bets

West Texas Intermediate (WTI) crude oil closed at a 6-week high on expectations for high summer demand while OPEC+ continues to limit supply.  WTI crude for Jul closed up $1.24 to settle at $81.57, the highest since Apr 30, while Aug Brent crude, the global benchmark, was last seen up 77¢ to $85.02.  Strong summer demand is expected to deplete oil inventories, with supply restricted after OPEC+ earlier this month extended 2.2M barrels per day of supply cuts slated to end on Jun 30 to the end of Sep.  Forecasters are looking for US inventories, which have trended mostly higher over the past 6 weeks, to show a drop when the Energy Information Administration issues its weekly survey on Thurs, a day later than usual due to the Juneteenth holiday.  The forecast is for US crude inventories will be down 5.5M barrels for the latest week.  This compares with an increase of 3.7M barrels for the prior week.  However weaker demand in China may limit any price gains.  A report yesterday was for output from China's refineries to fall 1.8% in May from the prior year, as the country's growth slows amid a debt crisis in its real-estate sector.

WTI Oil Closes at a Six-Week High on Expectations High Summer Demand Will Cut Into Inventories

NVDA's rise to become to the most valuable stock in the world brought excitement to the stock market in was otherwise a lackluster day of trading.  NVDA has had a spectacular run.  About 6 years the stock was a couple $s & today it's 135.  Stocks of its competition in the AI space have also had dramatic advances.  Meanwhile many investors are waiting for rate cuts by the Fed.