{"id":5322,"date":"2024-06-14T00:03:28","date_gmt":"2024-06-14T00:03:28","guid":{"rendered":"https:\/\/businesstriumphs.com\/index.php\/2024\/06\/14\/stock-market-pushes-higher-but-is-there-a-bond-market-surprise-brewing\/"},"modified":"2024-06-14T00:03:28","modified_gmt":"2024-06-14T00:03:28","slug":"stock-market-pushes-higher-but-is-there-a-bond-market-surprise-brewing","status":"publish","type":"post","link":"https:\/\/businesstriumphs.com\/index.php\/2024\/06\/14\/stock-market-pushes-higher-but-is-there-a-bond-market-surprise-brewing\/","title":{"rendered":"Stock Market Pushes Higher, But Is There a Bond Market Surprise Brewing?"},"content":{"rendered":"
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Well, the awaited CPI came in cooler than expected. The stock market liked what it heard, and equities rallied. So did bond prices. Later in the day, the Fed announced its interest rate decision, which, as expected, was unchanged.<\/p>\n

More importantly, the Fed\u2019s Summary of Economic Projections implies a quarter percentage point rate cut this year. The stock market has priced in more than one rate cut in 2024, yet the broader equity indexes didn\u2019t react much to this news.<\/p>\n

Thursday\u2019s lower-than-expected PPI and an uptick in weekly jobless claims may have added more optimism for equities. Both support the interest rate cut narrative. The S&P 500 ($SPX) and Nasdaq Composite ($COMPQ) closed at new highs.<\/p>\n

It doesn\u2019t seem like there\u2019s much that will come in the way of the market\u2019s path to pushing higher. Pullbacks have been mild, the CBOE Volatility Index ($VIX) is low, and the AI frenzy continues. There\u2019s no reason to start cutting rates when the going is good.\u00a0Looking at past interest rate cycles, you\u2019ll see that interest rate cuts happen when an economy slows down; so far, we\u2019re not seeing any signs of that happening.<\/p>\n

Bond Bonanza<\/h2>\n

The price action in bonds has been interesting. As Treasury yields decline, bond prices rise. The daily chart of the iShares 20+ Year Treasury Bond ETF (TLT)<\/a> below broke above the downward-sloping blue dashed trendline on June 3. The next day, TLT broke above its previous high (May 16) of around $92. A few days later, TLT pulled back, but still stayed above the downward-sloping trendline.<\/p>\n<\/p>\n

CHART 1. DAILY CHART OF TLT. The ETF broke above its downward-sloping trendline and above its previous May high.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

After Wednesday\u2019s double-whammy economic data day, TLT has continued higher. Thursday\u2019s price action is pretty convincing that bonds may have started their climb higher. Does it mean it\u2019s time to jump into bonds? The price action in TLT may have to do with the successful 30-year bond auction, so it\u2019s best to wait and see what happens in the next couple of days.<\/p>\n

What\u2019s Up With AAPL and TSLA?<\/h2>\n

Circling back to the equities space, there\u2019s been some interesting activity in specific stocks. Apple, Inc. (AAPL) saw its stock price soar on news of its AI partnership. After a pretty disappointing past few years, AAPL is now back in the spotlight.<\/p>\n

The weekly chart of AAPL<\/a> shows how the stock price traded within a consolidating channel in 2022, broke above that channel in 2023, and then traded sideways for most of 2023 and 2024, until this week. The stock broke above its December 2023 high and hit new highs.<\/p>\n<\/p>\n

CHART 2. WEEKLY CHART OF APPLE STOCK (AAPL). After breaking out of a consolidation channel in 2022, AAPL traded sideways for almost a year before breaking above its previous high in December.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

A pullback in AAPL would be a good time to get into the stock, especially if you missed this rally.<\/p>\n

Another stock in the news is Tesla, Inc. (TSLA), another S&P 500 stock that took a beating. Today\u2019s news about Tesla investors approving Elon Musk\u2019s pay package highlighted the stock. TSLA\u2019s stock price gapped up but closed near its low. The company faces headwinds such as tariffs on EVs, slowing EV demand, and increased competition.<\/p>\n

Technically, TSLA\u2019s stock price has broken above a consolidation pattern<\/a> on above-average volume (see chart below). It\u2019s also trading above its 21-day exponential moving average<\/a> (EMA).<\/span><\/p>\n<\/p>\n

CHART 3. DAILY CHART OF TSLA STOCK. Will the stock price rise if the CEO gets his pay package approval? One day\u2019s price action doesn\u2019t justify a trend, but it\u2019s worth following the stock.<\/span>Chart source: StockChartsACP. For educational purposes.<\/span><\/em><\/p>\n

We\u2019ll know tomorrow if Musk gets his pay package. The outcome will impact TSLA\u2019s stock price. Tomorrow ends another trading week. When it comes to large-cap stocks, there are no technical signs of a reversal. Tomorrow may be more of the same. There could be a mild selloff at the end of the trading day, or we could see buyers return. We\u2019ve seen that happen recently, so don\u2019t rule it out.<\/p>\n<\/p>\n

Disclaimer:<\/em><\/strong> This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Well, the awaited CPI came in cooler than expected. The stock market liked what it heard, and equities rallied. So did bond prices. Later in the day, the Fed announced its interest rate decision, which, as expected, was unchanged. More importantly, the Fed\u2019s Summary of Economic Projections implies a quarter percentage point rate cut this […]<\/p>\n","protected":false},"author":0,"featured_media":5323,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-5322","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5322","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=5322"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/5322\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/5323"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=5322"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=5322"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=5322"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}