Apple’s $3 Trillion Moment

Key Takeaways

• Inflation Appears To Have Peaked
• Oil Is The Wildcard
• Apple Shares Keep Climbing

Markets were quiet on Thursday as we move closer to the 4^th of July holiday. The S&P 500 was up 0.4% and the Nasdaq Composite was relatively unchanged. Two potential catalysts could lead to more activity today. This morning’s Personal Consumer Expenditures (PCE) report may spark some early morning trading. Today is also the last day of the quarter and first half of 2023, which can sometimes cause a flurry of activity as funds rebalance for the next quarter.

An interesting aspect to the end of this month and inflation which I think is being overlooked is oil. Oil is set for its first monthly gain this year. While many market observers are wondering why the Fed continues to plan on further rate hikes, I think the reason is oil. After initially surging early last year on Russia’s invasion of Ukraine, oil has since settled into a tight trading range. As today’s PCE report shows, inflation is still present, though we may be past the worst of it. However, if oil were to begin climbing, it could quickly accelerate the pace of inflation which is why I believe the Fed is leaning hawkish with respect to rates.

Speaking of this morning’s PCE report, it came in largely as anticipated. On a month over month basis, core PCE was up 0.3% which is what was expected. Year-over-year, core PCE increased 4.6%, also as expected. Both those readings are down from last month; however, they remain high. This suggests to me that we seem to have stopped inflation’s momentum and perhaps now we’re even beginning to see it turn down, albeit very slowly.

While we continue monitoring inflation, interest rates have climbed higher this week. Yields on the 2-year are over 4.8% and at their highest level since before the banking crisis in March. The benchmark 10-year is yielding just over 3.8%, causing the yield curve to remain inverted by over 100 basis points. I’ll be monitoring this as we near the next Fed meeting later this month where it’s largely expected they will raise rates by a quarter point.

Taking a quick look at individual stocks, shares of Nike are indicated down about 3% premarket. The shoe maker reported mixed earnings Thursday after the close. While they beat revenue forecasts, they missed on profits and offered tepid full year guidance. Also worth noting, Apple’s
AAPL
magic number is $190.74. That’s the price level at which the company will reach a $3 trillion market cap.

Finally, just a quick reminder that markets are open a half day on Monday then closed Tuesday for the 4^th of July. I hope you all have a great weekend and happy holiday.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.