DIA futures rose by 36 points, or approximately 0.1%, while S&P 500 and Nasdaq 100 futures also saw gains of 0.1% as the small cap rotation continues. This follows a strong performance on Monday, where the Dow advanced to record levels, and both the S&P 500 and Nasdaq posted gains. However, the rally has quickly become very extended with the T20 indicators suggesting the odds of a little rest or pullback have grown.

By 11:17 a.m. London time, the pan-European Stoxx 600 had declined by 0.39%, with all sectors and major bourses experiencing losses. Mining stocks were the hardest hit, dropping 1.89%, followed by the insurance sector, which fell by 1.12%.

Asia-Pacific markets exhibited mixed performance on Tuesday, influenced by a series of political and economic updates from the United States. Investors are also keenly observing China’s Third Plenum, where discussions are expected to focus on addressing high local government debt and promoting advanced manufacturing.

Economic Calendar

Earnings Calendar

Notable reports for Tuesday before the bell include BAC, MS, PNC, PGR, STT, & UNH.  After the bell include FULT, HWC, IBKR, JBHT, OMC, & PNFP.

News & Technicals’

President Biden expressed regret over his use of the phrase “put Trump in the bulls-eye,” which he mentioned to donors in a private call shortly before an attempted assassination of Donald Trump. Several Republican lawmakers have criticized Democratic campaign rhetoric, including Biden’s comment, for potentially inciting the incident. Biden clarified that he has never intended to incite political violence, emphasizing what he perceives as a stark contrast to Trump’s approach.

Apple has unveiled a preview version of its upcoming iPhone update, iOS 18. This beta version, available ahead of the official fall release, allows Apple enthusiasts and developers to explore and test the latest features. Notably, this year’s most significant new service, Apple Intelligence, is not included in the public beta. Apple has announced that users will have the opportunity to try out Apple Intelligence later this summer, adding to the anticipation surrounding the new update.

Federal Reserve Chair Jerome Powell highlighted that central bank policy operates with “long and variable lags,” explaining why the Fed would not wait for its inflation target to be fully achieved before taking action. Powell emphasized that the central bank seeks “greater confidence” that inflation will return to the 2% level. The Fed’s next policy meeting is scheduled for the end of July, where further decisions on monetary policy will be discussed.

As tech tensions between the U.S. and China escalate, vast networks of underwater cables have emerged as a new point of contention in international relations. These subsea cables, which carry 99% of the world’s data traffic, are crucial to the global internet infrastructure. The U.S. government has reportedly cautioned tech giants like Google and Meta about the potential vulnerability of undersea cables in the Pacific to Chinese espionage. This development underscores the growing complexities and security concerns in the digital age.

As we ramp up in earnings expect price volatility to continue to expand and the small cap rotation to continue.  Keep in mind we have a major distraction over the next two days due to Prime day shopping events across many retailers.  This at times create choppy market conditions so plan accordingly.

Trade Wisely,

Doug