 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Wednesday's Headlines 1. U.S. Markets Rally in Shortened Session 2. U.S. Payrolls Shrink... Again 3. Stocks Hitting All-Time Highs 4. R.I.P. Lee Iacocca 5. ECB Nominates Lagarde 6. The Best Performing Stock will Shock You Markets Closed
 Jared Alden/Getty Images
Another Record Falls as S&P 500 Reaches New High
U.S. markets were only open half day today ahead of the Independence Day holiday in the U.S., but investors were in the BBQ buying mood, sending the S&P 500 to yet another record close.
We'll keep today's note brief, but first, allow me to eat some crow.
I incorrectly stated yesterday that companies buy back their shares when they feel they are overvalued. Many of you were quick to point out my error, and you were right to do so. It's the opposite, and we know that. Companies buy back their shares when they feel they are undervalued... of course. It read so right, but was oh, so wrong. My apologies.
Private Payrolls Weak in June A survey of private sector hirings for June came in weaker than expected as only 102,000 new jobs were added versus a forecast of 135,000 according to ADP and Moody's Analytics. That sets the stage for Friday's non-farm payrolls report for June, which will be under the microscope.
Remember May's non-farm payrolls report when only 75,000 new jobs were added? That was a big miss and belies the purported strength of the U.S. labor market. If we get another miss, we'll have a bit of a nasty trend developing.
So Why Did the Market Rally Today? Good question. It's yet another case of bad news being good news for the stock market. Because the private payroll numbers were weak, which means the economy may be weakening faster than we think, investors are counting on the Fed to cut interest rates when it meets in July. Low interest rates are good for stocks in the near term, and most investors only care about that. By now, you should be pretty familiar with this chart from the CME's Fed Watch Tool. 100% of traders think there will be a rate cut at the July 31st meeting.  Getting Higher Markets are at or near record highs, which means many stocks are as well. Given that we are pretty close to the midpoint of the year, let's look at some of the notable names at the top of their games.
The Takeaway This is a broad list of companies, and I only selected 17 out of hundreds of stocks in the U.S. stock market hitting all-time highs. The rally is broad, and companies across industries are in favor right now. It may not last, but this is a strong indicator.  How are those IPOs Doing? I love this chart from HowMuch.net. So simple, but it drives the point home. It's been a buzzy half year for IPOs, but nothing has burned it up quite like Beyond Meat. The maker of the "Impossible Burger" is far and above the best-performing IPO of the year, and maybe in several years.
The back half of the year should be busy as well. We are expecting WeWork, Peloton, AirBnB, and Palantir—among others—to test the public waters. No guarantee that they will, but if the stock market stays hot, there is a good chance.  image courtesy Chrysler
R.I.P Lee Iacocca The legendary auto executive who led Chrysler back from the brink and brought minivans and Mustangs to our roads, passed away yesterday at 94 years old. Iacocca was a visionary who ran Ford and Chrysler in the 1970s and 80s. He helped bring the muscle back to U.S. auto manufacturing after Japanese and European automakers grabbed market share with better, sleeker cars. CNBC has a nice tribute to him, if you want to read more.  image courtesy IMF
Lagarde Nominated to Head of European Central Bank Yesterday, the European Central Bank nominated IMF Managing Director Christine Lagarde as its new President. She will succeed Mario Draghi, whose term expires October 31st; she has tough shoes to fill, and an even tougher assignment ahead.
Lagarde is a well-respected political figure around the world, but has no central banking experience. If her nomination passes, she will have to wrestle with slow growth gripping Europe's superpowers—including Germany, 19 member nations of the EU that all have unique needs and economic problems, and Brexit, of course.
We are off tomorrow, but we'll have an Independence Day Market Sum waiting for you in your inbox.
- Caleb
chart courtesy www.koyfin.com  The American software company Symantec saw their stock soar by over 14% after the announcement that Broadcom is moving to acquire them. The multinational food company Kellogg saw their stock rise over 6% once the business journal Barron's reported that they have 50 years of experience in the "fake meat" market over Beyond Meat (that, and MorningStar's Grillers Veggie Burger apparently tastes better too).  The American video game company Electronic Arts, or EA, witnessed their stock drop by over 4% after Yahoo Finance published a story about PC gaming being in the decline. Both Royal Caribbean Cruises Ltd. and Norwegian Cruise Line stocks sank by over 2% and 1%, respectively, after Business Insider reported that their ships were amongst the worse polluters in the industry.  Word of the Day The NVIDIA Corporation (NVDA) stock has bounced back to long-term moving average resistance after a June recovery wave and could turn sharply lower in the coming weeks, rewarding timely short sales. More importantly, the stock continues to trade uncomfortably close to December's 18-month low, raising the odds for a retest and breakdown that exposes price action to the double digits for the first time since 2017.
 first edition of the Wall Street Journal. July 8, 1889 courtesy Dow Jones
Today in History July 3rd, 1884: Charles Henry Dow, partner in Dow Jones & Co., publishes the first modern index of American stocks in his Customers Afternoon Letter, a two-page financial bulletin. The 11 stocks include nine railroads (Chicago & North Western, Delaware, Lackawanna & Western, Lake Shore, New York Central, St. Paul, Northern Pacific, Union Pacific, Missouri Pacific, and Louisville & Nashville), a steamship company (Pacific Mail), and telegraph giant Western Union.
Phyllis S. Pierce, ed., The Dow Jones Averages 1885-1980 (DowJones Irwin, Homewood, IL, 1982), introduction, not paginated. Chart of the Day: There's No Copying Xerox's Stock Performance  As we pass 2019's halfway mark and the S&P 500 has hit yet another new all-time high, it's a good time to focus in on the top performing stock in the benchmark index. That honor easily goes to the Xerox Corporation, which returned over a whopping 80% in the first half of the year. This remarkable performer blew way past its closest rivals, Cadence Design Systems (CDNS) and Advanced Micro Devices (AMD), both of which have returned "only" around 70% year to date.
Xerox is no longer just the photocopier company it was for many decades. It now sells a wide variety of document management systems, digital solutions, software, and hardware products. That said, the company has been on the edge of irrelevance for many years and actually announced early last year that it would be selling a controlling stake in the company to Fujifilm.
When you look at the sales numbers, it's clear that the company continues to struggle. Analysts forecast significantly declining revenue in the years ahead, and 2018 saw the stock drop by a disastrous 32%. Where the company seems to shine is its focus on improving profits. Even with analysts' dismal expectations for revenue, earnings are forecast to have substantial upside going forward due to cost-cutting and streamlining of operations.
After January's earnings release, Xerox stock surged sharply and has hardly looked back since. What might happen with Xerox going forward? While it's had its time in the spotlight, XRX is far from a growth stock. There are likely many other companies that could take the performance crown from Xerox into the second half of the year and beyond.
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Wednesday, July 3, 2019
Half Way
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