Why Are Growth Stocks Rallying After Inflation Data?

TL;DR

Growth stocks are rallying due to a drop in the 10-year treasury yield and positive market sentiment, despite higher-than-expected wholesale inflation data. The NASDAQ's strong finish is supported by major mega-cap stocks, while differing expectations between the Fed and the market suggest that the Fed may halt further rate hikes. Key stocks in focus include Adobe, Parsons, and Lennox International, each showing strong performance.

Transcript

good afternoon everyone and welcome to stock market today it's Ali Corman kenri here with a breakdown of the action in today's session where we saw gains and it looks like can a pretty strong finish at least for the NASDAQ well I'll tell you what Ally when you're in a a confirmed uptrend you want to you want to see these uh you know late late sessi... Read More

Key Insights

• 🎭 Growth stocks are performing well, indicating positive market sentiment.
• ☠️ The FED's rate hike plans are at odds with the market's expectations, suggesting potential divergence.
• 💗 The market's reaction to higher inflation data shows growing confidence in the FED's ability to engineer a soft landing for the economy.
• 🔨 Adobe's AI tools introduced at the Adobe Max conference are garnering market optimism.
• 🛀 Parsons, operating in the defense and intelligence sector, showed strength due to positive qualities and growth acceleration.
• 💪 Lennox International, despite being in a less appealing industry, has a strong stock performance and fundamentals, making it worth watching.
• 🏛️ The upcoming earnings season will affect stock buying decisions, with the importance of building profit cushions before reports.

Questions & Answers

Q: Why did the NASDAQ have a strong finish?

The NASDAQ had a strong finish due to late-session buying, which is favorable during a confirmed uptrend. Mega-cap stocks, particularly in the NASDAQ 100, performed well.

Q: Why did growth stocks show improvement?

Growth stocks showed improvement as there was a drop in the 10-year treasury yield, which positively impacted their prospects. Additionally, the weakening US dollar further supported growth stocks.

Q: How did the market react to the FED minutes and wholesale inflation data?

The market seemed to disagree with the FED's rate hike plans, with the majority of fed funds futures traders foreseeing no more rate hikes this year. Despite higher-than-expected wholesale inflation data, the market appeared to be comfortable with the FED's soft landing approach for the economy.

Q: What are some key levels to watch for in the major indexes?

Resistance levels to watch include the 50-day line for the NASDAQ and the 200-day line for the Dow. The S&P 500 is above its 21-day line, with the 50-day line within reach. Small caps have been struggling but showed some improvement.

Summary & Key Takeaways

• NASDAQ had a strong finish, with the NASDAQ 100 and mega-cap stocks leading the way.

• Growth stocks showed improvement and came back to life after a drop in the 10-year treasury yield.

• The FED's rate raise expectations differ from the market's, which may indicate that the FED's rate hike plans might be done.

• Stock market acted positively despite higher-than-expected wholesale inflation data.