13 June Market Breadth Negative S&P 500 NASDAQ Record Closing Highs

The S&P 500 went up by +0.2% and Nasdaq Composite was up by +0.3%. These 2 indices added to their record closing highs on Thursday (13 June 2024), but market breadth was negative and other major indices closed with losses. The Dow Jones Industrial Average fell 0.2% and the Russell 2000 settled 0.9% lower.

The underlying negative bias was driven by some stocks normal consolidation, this was followed by many stocks experiencing big run. The decliners led advancers by a nearly 2-to-1 margin at the NYSE and at the Nasdaq.

The downside bias was not able to be offset by dropping market rates and solid gains in some mega cap stocks.

The 10-year note yield fell six basis points to 4.25% and the 2-year note yield declined six basis points to 4.709%. This price action was in response to a cooler-than-expected inflation reading in the form of the May Producer Price Index, a weaker-than-expected initial jobless claims report, and today's $22 billion 30-year bond reopening, which was met with solid demand.

The below mentioned semiconductor names helped to boost the information technology sector (Up by +1.36%) which came up as the top performer among the 11 sectors.

Super Micro (SMCI) also registered an outsized gain of +12.4% in sympathy with AVGO.

The rate-sensitive real estate sector (+0.5%) showed the next largest gain, benefitting from the drop in market rates.

The US government plans to recalculate the quality ratings of Medicare Advantage plans following federal court rulings in favor of SCAN Health Plan and Elevance Health (ELV). This recalculation is expected to result in hundreds of millions in additional bonus payments to insurers next year. SCAN Health anticipates an increase of around $250M for 2025 due to the recalculated ratings.

Broadcom (AVGO) surged as much as 15% on Thursday, reaching a record high after a stellar quarterly report that exceeded both top-line and bottom-line estimates. The semiconductor giant forecasted full-year revenue of $51B, surpassing the $50.58B estimate.

Shares ended the session 12.29% higher at $1,679.29, marking the fifth consecutive session of gains. Broadcom is making significant progress in integrating VMWare into its core business, focusing on simplifying product offerings and transitioning to a subscription model.

I think this would be a good time to buy into Broadcom at around $1,639 as I believe there is some consolidation coming as Broadcom approaches nearer to its stock split.

GameStop Corp. (GME) postponed its annual meeting on Thursday due to technical difficulties, specifically server outages caused by heavy traffic. The company has not yet announced a rescheduled date for the meeting, which includes voting on the election of directors and other key issues.

There might be some more action from the bulls, ahead of the meeting, though the meeting is not rescheduled I believe the interest in this stock is still there.

Roaring kitty might have cut some of its GameStop options position as we continue to see volatility in GME trading.

Wells Fargo (WFC) fired more than a dozen employees from its wealth and investment management division in May after investigating claims of faking work. The employees were found to be simulating keyboard activity to create the impression of active work. The bank has been working to clean up its image since a scandal in 2016.

While we might continue to experience negative bias, the strong performance from semiconductor like Broadcom, Nvidia and SMCI should continue to help other mega cap stocks.

Today the consolidation might happen for some stocks, but I would think indices should trade rather flat ahead of the economic data on Friday (14 June 2024).

Appreciate if you could share your thoughts in the comment section whether you think indices like S&P 500 and NASDAQ should continue with positive gains with help from the semiconductor and info tech sector?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.