Markets continued to put aside any fear of inflation and a weakening jobs market. Yesterday afternoon, the Labor Department reported initial claims for state unemployment benefits fell by 12,000. The combination of strong inflation in January 2024 and a strong job market will ensure the Fed keeps rates above 5% for much of 2024.
Today, expect stocks on the S&P 500 to trade at 52-week highs to reward traders. Nvidia (NVDA), Broadcom (AVGO), Iron Mountain (IRM), CSX, Tapestry (TPR), and Wells Fargo (WFC) are among the firms that closed at new highs yesterday. Nvidia soared by 16.36% after posting strong results that beat even the most bullish Wall Street analyst estimate.
AMD benefited from Nvidia’s rise. Be wary of buying AMD over Nvidia, when the latter is a leader in both the AI server market and the PC graphics gaming sector.
Gold is the negative outlier. Newmont (NEM) closed at $30.89, down 7.6% after the firm cut its dividend from 40 cents a share to 25 cents a share. The dividend cut is a red flag. The firm estimated generating $2.4 billion in free cash flow, assuming gold prices of $1,800 per ounce. Its buyback of $1 billion over two years is a meager return for shareholders.
NEM stock is a hot trade for bears betting against the firm.
