Markets pushed to new historic highs today on the large-cap indexes, while small-cap indexes pulled back from yesterday's surge. The S&P 500 (SPX), Nasdaq 100 (NDX), and Dow Jones Industrial (DJX) indexes all notched about 0.2% higher closes on light volume. Yet another bullish indication for the coming months appeared as the Volatility Index (VIX) for the S&P 500 closed at a new 52-week low level.
The chart below compares the movements of the VIX and State Street's S&P 500 tracking ETF (SPY), to show why it is no surprise that the VIX should make a new low since SPY has broken above old highs for the past two weeks. The real question to ponder is why it took so long.
This chart, quite simply, shows the effect of elevated concerns in the market over the past few months. Whether it be the U.S.-China trade talks, the impeachment testimony, the Fed repo actions and rate cuts, or concerns about Brexit, the market has no end of reasons to worry. Today's break lower on the VIX is an indication that investors are willing to continue investing despite such worries.
Do Turkey Producer Stocks Imply Consumers Are Eating Out?
With Thanksgiving Day just a stones throw away, U.S. families will soon be making that trip over the river and through the woods to sit down and feast. But will they do so at Grandma's house or Grandma's roadside restaurant? If stock price charts have the ability tell this story, the answer appears to be the latter.
Seaboard Corporation (SEB), Hormel Foods Corporation (HRL), and The Kraft Heinz Company (KHC) are three of the bigger, publicly traded companies that produce turkey meat in one form or another. But 2019 has not been particularly kind to these stocks.
On the other hand, Sysco Corporation (SYY) is doing quite well, outpacing the consumer staples sector in general. Sysco is a supplier to nearly 75% of all of the independent, locally famous, non-chain restaurants in the country, and a producer and distributor of Turkey products themselves. By this data alone, it makes one wonder if more people than ever before are willing to forego the holiday food prep and pay someone else to clean up afterward.
New Home Sales Data Reported at New Highs
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development's jointly produced new home sales report is often considered a leading indicator of economic activity. Against the better judgement of those who think the market is teetering on the edge of disaster, this data seems to indicate that the economy may continue chugging along.
Federal Reserve Governor Lael Brainard, in her speech at the New York Association for Business Economics award ceremony, claimed that this data was evidence that the Fed rate cuts were already having an impact. It's hard to hate the idea of investing with data and opinion like that flowing around.
The Bottom Line
Stocks closed slightly higher today, and volatility broke to a notably low level. Despite noisy market issues in the news, investors seem to be willing to continue keeping assets in the stock market. Turkey consumers may be willing to eat out for Thanksgiving if Sysco Corporation's stock is any indication in comparison to other turkey producers. New home sales data was stronger than ever, a very bullish indication.
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