On today’s episode of Market Domination Overtime, Hosts Julie Hyman and Josh Lipton break down the market close and some of the biggest stories of the trading day.
The Dow Jones Industrial Average (^DJI)close at a record high in Monday’s session, closing 0.53% higher. Meanwhile, the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) ended the day in the green, slightly below their record closes. The S&P 500 hit an all-time high intraday.
Former President Donald Trump has announced Senator JD Vance (R-Oh.) as his vice presidential pick just days after surviving an assassination attempt in Pennsylvania. Unlimited co-founder, CEO, and CIO Bob Elliott notes that following the assassination attempt, the odds of Trump winning the election have increased. He explains, “What we’re seeing is actually gold (GC=F) as one of the best-performing assets in the market, reflective of the fact that we’re likely to get large deficits ahead as the Republicans have a higher probability of controlling all three chambers of the US government. We’re seeing bonds sell off as a function of growth likely being stronger and having those larger deficits and higher inflation.”
Meanwhile, Alphabet (GOOG, GOOGL) is in talks to acquire cyber security startup Wiz for $23 billion, according to a report from the Wall Street Journal. Jefferies senior analyst Brent Thill is excited by the deal, stating: “I think this makes a lot more sense given that they [Wiz] can address both small, mid, and large enterprises with this technology. That the government — there’s zero chance, in my opinion, they could push back on this because it’s enabling the security and safety of data, and no one has dominant market share, so it makes a lot of sense for us… I’d be a lot more excited as a shareholder if this was happening.”
Finally, Julie Hyman and Josh Lipton break down what to watch on Tuesday, July 15, from major bank earnings to the kickoff Amazon’s (AMZN) Prime Day.
This post was written by Melanie Riehl
Video Transcript
There’s the closing bell on Wall Street and now it’s mark domination over time.
We’re joined by Jared Blicker to get you up to speed on the action from today’s session.
Let’s start with where the major averages ended up and where they ended is off the highs of the session following that announcement that we got just a little while ago, that former President Donald Trump had chosen JD Vance, Senator of Ohio as his running mate.
We actually saw stocks come off their highs a little bit whether that was the exact reason or not.
The timing did coincide.
We saw the dow coming down towards its lows of the session.
Still finishing at a record today up by about a half a percent or 210 points.
The S and P 500 though not closing at a record again, today was there for much of the session and then again, had that late leg downward.
So finishing higher by about a quarter of 1%.
And finally, the NASDAQ also not at a record today but up still 1/4 of 1%.
So still selling a rally today, it’s just not as strong as it was earlier in session, we did of course have fed Chair Jay Powell earlier in the day in comments in a Q and A session saying that now we’ve had three good reports on inflation.
So he is more encouraged on the path of inflation, but he wouldn’t commit to a cut in July versus September.
And then there’s one stock that I want to highlight today that has been the top of our trending list for much of the day.
And that is Trump media and technology group up by 30 percent on the day as we frequently pointed out DJ T that’s the ticker is really the closest proxy for former president Trump’s chances in this election.
And so not surprising here as we have seen the odds on various betting platforms go higher.
Some of the pundits out there talking about how his chances have been improving that we see this stock finishing the day with a big, big gain.
Jared’s got a closer look now at the sector action.
Thank you, Julie.
I want to just take a look at the small caps just for a second here.
Russell 2000 ending up pretty close to the high.
So that sell off that we saw late in the day.
And by the way, it’s no small thing to enact a sell off, uh during the highest liquidity portion of the day.
Uh but the Russell 2000 not feeling that sell off and in fact, here’s a four day look up 8%.
Um And if I, if I show you the four year chart, you’re gonna see how finally, finally it looks like small caps breaking out of this nasty resistance level that has just trapped them since the beginning of 2022.
2022.
We’ll see if it continues.
But now I want to take a look at the sector action energy in the top spot that is up 1.56% today, followed by financials up 1.4%.
Then you have industrials and real estate communication services.
But really a day for value, cyclicals utilities was the biggest loser down 2.4%.
Also staples and health care in the red.
So kind of a kind of a bullish day, the sectors that were in the red, largely those defensive ones, although not consumer discretionary.
Uh I’m going to show you the NASDAQ.
So we get an idea of what the growth picture looks like.
But then I’m going to flip over.
I want to show you what’s going on in energy.
That was the leading sector of the day.
We’re going to get slum, slumber, Schlumberger earnings at the end of the week.
That’s gonna, that stock up 3% today.
Halliburton also do this Friday and then next week we get Exxon and Chevron, but not this week.
Also want to check out what’s going on in the banking sector as we get those earnings rolling in.
Guess what?
JP Morgan up 2.5%.
Goldman Sachs up 2.6% guys.
Thank you, Jared for more on the markets.
Joining us now is Bob Elliott Unlimited co-founder, Ceo Cio Bob.
It is good to see you.
So, uh, you know, politics, front and center here, Bob, the big news, of course, Trump does officially pick Senator Vance as his running mate, running mate.
The Republican National Convention is underway.
Investors are, you know, placing their bets, Bob on who they think is gonna take the White House.
I know you’ve been, you’ve been following this very closely, Bob, what do you make of it?
What, what are you telling your clients right now?
Well, when we look at what’s going on in the market action today and really since what happened over the weekend, uh where we saw an increase in odds that Trump would be elected to the presidency.
We’re seeing market action largely consistent with those increased odds.
And so if you go line by line in terms of the market action, what we’re seeing is actually gold as one of the best performing assets in the market.
Reflective of the fact that we’re likely to get large debt deficits ahead as the Republicans have a higher probability of controlling all three chambers of the US government.
We’re seeing bonds sell off as a function of growth, likely being stronger and having those larger deficits.
And higher inflation.
And we’re seeing some stock rally but not that much stock rally in the market, reflecting the fact that it’s going to be challenging to keep up this level of growth with, with those level of deficits and upward pressure on interest rates.
So you put that all together, it’s not necessarily a great environment for overall asset prices, but it does favor gold and stocks relative to bonds.
And one last thing to highlight is, of course, it’s been favorable to Bitcoin.
Uh as the Trump administration has pivoted and indicated a positive stance towards various crypto assets.
And that’s likely to be part of the reason why Bitcoin is rallying here as well.
Bob I can’t, as we continue to sort of parse out what each candidate’s chances means for the markets, I keep going back to 2016.
But there lots of other examples where Marco participants thought that a candidate who then won the presidency was going to mean one thing and it didn’t necessarily mean that thing.
So as you are trying to strategize based around all of this, how are you sort of trying to factor in the uncertainty level here?
Well, I think there’s still a fair amount of uncertainty in terms of um what exactly the policy mix is going to be.
I think we’re in a bit of a different circumstance than where we were back in 2016.
We have a track record of policies, uh measures that uh both administrations have pursued over the course of their time in office and we have pretty well developed uh perspective in terms of what incremental policy policies will be.
So I think we’re a lot better shape, a lot less uncertainty than maybe existed before.
I think probably the increased uncertainty starts to emerge as we start to get to a higher probability that the Republicans control all three branches of government.
In that case, there’s a lot less constraints on policy making than may have otherwise existed in more divided government.
And as a result, certain policies might be pursued that wouldn’t have otherwise been pursued or even talked about during the campaign period.
And so I think it’s very important to recognize that probably uncertainty increases as the probability of full control also increases.
Is your sense, Bob, you mentioned their divided government is your sense markets would, would actually prefer divided government.
I think there’s a balance in terms of uh you know, a divided government is a lot more certain, uh whether it’s uh led by a Republican administration or a democratic administration.
Uh I think there’s a lot of uh you know, pretty much business as usual would likely transpire if we have a divided government.
I think the challenge is we get to a bit more uncertainty as control of all three chambers emerges.
And so I, I think that’s the, the, the balance is probably uh more increase of control by the Republicans would lead to even more deficit spending and particularly corporate beneficial deficit spending.
Uh but there’s some uncertainty about that.
And I think what we’re seeing in the stock market, not really rallying a ton on the incremental news is a reflection of that balance of increased uncertainty, more favorable policy, but also increased uncertainty.
Um, Bob, if you um were given the factors of the presidential election and I guess let’s call it the election overall because of the down market, uh ballots also um earnings and the Federal Reserve’s uh interest rate cutting cycle.
Like how do you weight each of those when it comes to your strategy?
Well, probably the, the biggest thing that that’s going to determine how markets transpire, at least for the next, let’s say, three months up until the election is going to be uh how earnings and growth transpire relative to expectations.
And I think one of the challenges that we see in this market right now is that there’s very high growth expectations and very high earnings expectations penciled out through the end of the year or something like 17% year over year earnings growth for the S and P 500 as a whole is expected by the fourth quarter.
That’s going to be pretty challenging to achieve in an environment where we see aggregate growth softer than it was, you know, late last year and where actual earnings growth, you know, has been closer to flat over the last couple of years rather than up.
And so I think that probably that mismatch where maybe growth doesn’t end up coming in nearly as strong as what’s expected or priced into the equity market.
That’s probably the most important dynamic that’s going to transpire once we get closer to the election, which is, you know, is a few months ahead.
If there is more uncertainty, then that will probably be a more dominant force.
But in the interim, it’s really about how the economy holds up relative to those expectations.
Well, we’ll get more information on all of those factors in the coming weeks and months.
Good to see you, Bob.
Thank you.
Coming up.
Auto Nation warns a recent cyber attack will take a toll on its upcoming earnings.
We’ll have more details on that and more market domination over time.
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Let’s take a look at another trending ticker today here on Yahoo Finance Autonation stock is climbing today after cutting earnings per share guidance for the coming quarter.
Cyber attack on CD K Global, a software company catering to car dealerships knocked the company’s management system offline for two weeks, hurting thousands of retailers and joining us now with more is Yahoo Finance’s own pros submarine and pros.
Yeah.
Hey Josh.
Yeah.
So we’re starting to hear more about the damage from that CD K hack happened around June 19th with systems down uh over 10 days or so about two weeks before they were restored.
Now, Autonation is saying that this will hit their EPS by around a dollar 50 a share.
It projected eps of 315 to 330 a share before I’m sorry, the analysts projected eps of that uh before this.
So we’re looking at a pretty significant um kind of kind of hit here.
Uh So I think the big issue here for, for Autonation and other dealership groups is that uh they’re gonna be under pressure even from like 11 to 10 days of lost sales because the end of June is such a high volume time for them.
They’re, they’re moving old product.
Uh it’s end of the quarter in the month.
That’s a big deal for them.
So what happens is a lot of these sales might get pushed into Q three or they might be lost altogether.
So we’ll see what other, uh, dealership groups got to say about what happened to them during the CD K hack and outage.
It was interesting too because it seems like part of the loss, um, revenue and whatnot or the cost associated with it is that they were still paying their employee, you know, they still have to pay people even if no money is going out the door.
So it seemed like that was part of the issue at Auto Nation if I understood it uh correctly.
Yeah, they said it was split evenly between um like lost sales.
But also they have to have a sort of compensation that, that they give no matter what to their sales people, the sales staff that needs to be paid out no matter what they do in terms of uh sales and quotas.
So, yeah, exactly.
Right.
That’s half of the loss was because of this compensation to those, to those sales people who were recording no sales during that time.
Thank you, Braz.
Appreciate it.
Thanks, Google Parent Alphabet.
Reportedly nearing a deal to acquire cyber security start up.
Whiz.
That’s according to the Wall Street Journal, the groundbreaking $23 billion deal would be the largest acquisition for the company for more on what Alphabet’s move in the cloud.
Cyber security space could mean for big tech.
Let’s get to Jeffrey, senior analyst Brent who’s joining us now to discuss Brent, it’s good to see you.
So obviously, this would be a big deal.
Um a big deal at a time when big deals are scrutinized by Washington.
So why is it so appealing that alphabet might be considering this even in the face of that perhaps scrutiny?
Yes, security is number one and Google right now effectively is trying to get bigger trust with larger enterprises and small and mid size enterprises.
So Wiz would effectively help build their credibility in in ensuring your data is secure uh in the cloud.
And that again remains the top cio priority.
Uh If you recall, they were uh effectively in the hunt for hubspot, which we never thought made a lot of sense given it’s an application company, they’re not really in the app space.
They are on Amazon Aws.
There were a bunch of other considerations in this situation.
I think that they can make the case that uh there is precedent if you look at PTA networks, uh $100 billion plus market cap, uh cloud flare, there are a lot of cyber names that have inherently higher market caps if Wiz continued on its trajectory.
Uh You know, certainly you, you could, you could start to look out four or five years, could, could the company independently have this type of multiple.
So I think uh relatively speaking, other cyber names, uh We’re at that valuation and they could uh from a uh a perspective on the financials could make that actually work pretty well.
Um So I, I was not a fan of the hubspot transaction uh potential.
I think this makes a lot more sense given uh that they can address both small mid and large enterprises with this technology.
Uh The the government, there’s zero chance, in my opinion, they could push back on this because it’s enabling the security and safety of data.
Uh And, and no one has dominant market share.
Uh So it would make a lot of sense for us.
So, uh again, we’re uh we, I heard a lot of chatter uh and M and A by Google, none of it’s happened.
Uh Clearly the hubspot deal, uh at least in the interim fell apart.
But this deal, in my opinion makes a lot more sense.
I would, I’d be a lot more excited as a shareholder if this was happening, Brent.
I also want to get your take kind of broadly on the software sector and what you see he had in the back half.
How optimistic are you, Brent?
I asked and we had a, another financial analyst on the show earlier that relatively more, more cautious on software.
Where are you at?
I’m more excited because everyone hates software right now.
I’ve said this II, I feel like I’m uh I’m changing oil underneath uh with no daylight.
And, you know, I, I it’s been a tough, tough front half of the year.
So I think the sentiment is awful.
Most of our big institutional investors are underweight software, everyone is in hardware semis A I infrastructure.
So I’m actually gonna take the other side of this, which is, I think that right now everyone is so negative and I haven’t seen this in my career for, for as long as I’ve done this and how negative it is.
So what when you think about the sentiment and the setup, uh it just feels, it feels really bad and as they say, invest in uh with uh with fear and, and sell with greed and right now we got a lot of fear.
So I, I think it’s go time.
Uh The IGV has been slowly making its way back up against the semi names.
Uh Again, I don’t, I’m not expecting a breakout but if, if companies actually maintain or even cut out a little bit de risk, the guy that starts to look at 25 multiples come in, you start to see more M and A Trump gets in office and M and A comes back.
I mean, my, my view is like, it’s, it’s more constructive for software just given how negative everyone is.
I can’t imagine it getting more negative unless companies have to cut numbers by like 20%.
I don’t see that, but we just had workday sales force, a number of companies cut numbers.
So I’m, I’m actually moderately more constructive because I think a lot of the bad news is already in the stocks.
Brent.
I got to pick up on one particular thing you said, which is that if Trump wins election here, that the M and a landscape gets a lot more constructive, is that, is that how you think that would play out?
I think most are believing that, um, it would be more business friendly, uh, uh, with, with uh Republicans in office.
Uh Ultimately, I, I’m, I’m in, uh, I think that it could potentially help.
Uh, and we’ll see, we don’t, we don’t know, but perhaps that could help.
And again, it’s been too restrictive if you look at past deals that have been shut down, you know, Amazon trying to, trying to buy a vacuum cleaner company.
Uh I robot Adobe getting blocked in fig A when there was no oo overhang.
And again, I know these were eu decisions, not us decisions, but I do think that, uh, ultimately the consolidation of our segment needs to happen, there needs to be more of it and it actually is healthy for the overall, uh, you know, landscape and tech.
And so I, I think that, you know, the perceived, uh him going to office could actually be, be a good positive for small and mid cap software names as we go into the back half of the year.
Brent, as we head into earnings here, you look at those big tech names.
I I know you, you favor um many of them but you know, in your coverage universe, Amazon uh meta alphabet Microsoft is there, is there one name Brent?
You’d be, you know, more bullish than the others heading into the print?
We, we, the, the biggest theme right now is A I and so for us in the enterprise that’s Microsoft and Amazon for the Enterprise for Consumer A I, it’s Meta and Google and I still am holding to this and I, I know it’s super boring but the companies with A I that are gonna win are the companies that have capital that have users and have the data and those companies have those ingredients.
So while everyone wants me to say some small cap or some other name, I just keep looking back and again, I’m glad we’ve had this pick for the front half of the year.
I mean, these stocks are up between 2030 plus percent year to date.
They’ve been steady, they haven’t had NVIDIA like returns.
But remember A I is not out of infrastructure, it will come to software and I think it comes to Microsoft Amazon uh in, in the others I spoke about first and they unbelievable positions.
And so we, we continue to have that framework uh for, for the back half of the year, Brent.
Um something you told us earlier this year has just really stuck with me, which you said 2024 is going to be the start of the implementation of A I and then 2025 is really going to be the revenue year.
When we start to see that more.
As you’re aware, there’s been a little more skepticism even around, not in software, but even more broadly that A I is gonna bring all these changes uh that have been talked about as we’ve gotten further along.
I mean, that was a few months ago that you talked about that, like, what is gonna be the killer use case or how is this all gonna play out as we head into the rest of this year and into next year today, it’s all an infrastructure.
If you look at uh energy data centers, uh Nvidia’s out performance.
So we’ve talked about A I being an infrastructure, it’s not in applications, it will spread and it will come to our lives.
And I think you, you’ve already seen it in some of the products that Google has.
You’re seeing it in my daily use of perplexity, you’re seeing it now, companies, many of the financial services organizations are starting to roll out Microsoft Copilot and we’re, we’re just getting initial access.
So we’re all going through the training.
We’re learning, we’re not A I ninjas.
I, I, I’m, I’m an A I dummy right now.
I’m still learning how to use these products.
And again, we’re, we’re effectively um you know, a A as, as as kids either cannonball or put their baby toe in the water, we’ll put our baby toe in the water right now on A I and so we’ve said this, that in software it’s gonna be really slow, it’s gonna be slower than we all think.
And then it will accelerate super quick.
So we’re gonna overestimate the near term, underestimate the long term as they say.
And the use cases are so wide, wide, wide ranging, you know, health care, you know, radiology finding, you know, issues with, with patients that doctors can’t pick up.
Uh So you see it in health care, you see it in financial services making better decisions, you see it in everyday emails.
Like how do you write a better, how do you write a better composed email or ensure that you’re not forgetting something?
How do you, how do you do sales targeting?
How do you, there’s, there’s so many use cases we could talk for hours and I think every industry is going to be impacted and it’s gonna be slow, it’s not gonna happen overnight.
And I’ve said this, I don’t believe again, software to this, you know, this year companies like salesforce.com have said zero revenue from A I.
So it’s coming to a theater near, near you.
It’s not out yet, but it’s gonna take a long time.
It’s all in enabling infrastructure.
So 24 is a year of infrastructure, highway, procure the land, build the build, build build the infrastructure, the pipes, all that and then put up these applications on top of that infrastructure.
That is more of a late 24 into 25.
And look, they’re gonna be some wild A I disasters.
They’re gonna, it’s gonna happen.
Right.
And right now it’s, is, in my opinion, it’s easier to pick the winners and the losers because we can see who’s winning.
Microsoft’s winning.
Amazon’s gonna win.
They’re sitting on 50% of the, the cloud computing market share.
They are getting looks from many of the top companies we interact with to, to help their uh their customers with A I.
So we are really, really early.
Uh It’s gonna be a fun journey.
It’s gonna be a wild journey.
But again, I think we’re, we’re like the beginning of this trail and uh other companies like, you know, sales force who, who’s coming from behind will catch up.
And so there’s ways to play this too in Laggards like, you know, that’s probably more of a 25 way to play.
Not a 24.
Well, we’ll keep having that discussion as we go from dipping in the baby toe to wading into diving and maybe at some point, Brent, it’s great to catch up with you as always.
Thanks.
Thank you.
Time now for two watch Tuesday, July 16th, starting off on the earnings front will be getting more bank earnings ahead of the open including Bank of America Morgan Stanley and PNC and also expecting Bank of America’s net interest income may reach a new low for this cycle.
We’ll also hear from Dow component.
United Health Group Companies announcing its second quarter results ahead of the opening bill and switching over to the fed will also be getting a little bit of fed commentary from fed Governor Adriana Kugler.
This coming after comments from Fed chair Jay Powell today who said if the fed waits for inflation to get to 2% to cut, it’s waited too long while still gonna get some fresh economic data.
Monthly retail sales were out at 8:30 a.m. Eastern time.
Economy is forecasting sales decline 0.3% in June.
And speaking of retail, Amazon’s prime day sales get underway.
The sale starts tomorrow.
It’s running through July 17th.
Adobe analysts predicting roughly $14 billion in combined sales for both days.
That would be a unique record and that’ll do it for today’s market domination over time.
Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing bell.
But don’t go anywhere on the other side of the break.
It’s asking for a trend.
Got you covered for the next half hour with the latest and greatest market moving stories.
You can get ahead of the themes affecting your mother.
Stay tuned.
