US stocks climbed modestly on Wednesday. Oil prices dropped and the S&P 500 Index (^SPX) and Nasdaq lagged the Dow slightly as chip stocks lost some of their recent momentum. For domestic stock funds, there is one new “Buy” trade this week, the Invesco Large Cap Growth ETF (PWB), says Brian Kelly, editor of MoneyLetter.
An Iranian statement said they were purportedly committed to opening the Strait of Hormuz within the next month, but the White House labeled the report a fabrication. The markets seem to be focused on two things: Progress (or lack thereof) in Iran and the impact of AI.
Invesco Large Cap Growth ETF (PWB)
Data by YCharts
Investors are also feeling a little nervous that chip stocks may have gotten a little bit over their skis. The yield on the 10-year Treasury has declined almost 20 basis points in a little more than a week, which is helpful for equity and bond prices.
In a turnaround from last week, three of our four major global stock markets were higher during the one-week reporting period. From May 21 through May 27, the S&P 500 was up 1.2%; the Euro Stoxx 50 added 1.6%; and the Nikkei 225 surged 8.7%. The Shanghai Composite was the lone loser, finishing 1.6% lower.
If there is an agreement with Iran, oil and bond yields will decline. This would be good news for US and international stocks. But while we would expect a controlled relief rally, the more interesting factor would be the potential opening of the door to Federal Reserve interest rate cuts. Stay tuned – and trade PWB while you wait.
