S&P 500 posts another record close, Costco raises membership fees: Market Domination Overtime

It was another big day on Wall Street. The three major indexes (^DJI,^GSPC, ^IXIC) closed higher, with the S&P 500 logging its 37th record close of 2024.

One of the big reasons for the stock market gains this year has been the continued strength of megacap tech names. Allspring senior equity portfolio manager Margie Patel tells Market Domination Overtime that she’s sticking with those names because she doesn’t see that trend ending anytime soon.

Costco (COST) made waves after the close, announcing it will raise its membership fees for the first time since 2017. Gold Membership prices will increase by $5 to $65 starting September 1, 2024.

Amazon’s (AMZN) 2024 Prime Day sales kick off next week. Visible Alpha telecom sector analyst Melissa Otto explains why this year’s event could be a big deal for the tech giant.

For more expert insight and the latest market action, click here.

Video Transcript

There’s the closing bell on Wall Street.

Now it is market domination over time.

We’re joined by Jared to get up to speed on the action from today’s session.

Let’s start with where the major averages end of the day, we saw a little late day push here higher for the Dow and the other major averages.

So taking the Dow up 429 points 1.1% here.

The S and P 500 also finishing higher by more than 1% above 5600 trading at another record seven straight is higher.

37 record close of the year if I’m correct there.

So seeing that melt up, but really 1% I don’t know if you still call that a melt up because it’s a bigger increase.

Same goes for the NASA composite, another record close as well up by 1.2%.

We saw strong performance from large cap technology in particular, here was pretty broad based rally.

But still, if you look at things like the equal weight index though, not keeping pace, so you again, Jared and I know we’ve been beaten this horse a lot this year, but indeed, a lot of what we saw today did have to do with that mega Cap Tech, you bet.

And let’s just hover on these indices just a little bit longer for the S and P 500 the NASDAQ 100 the NASDAQ.

This is the seventh day in a row that they have been up, up 10 of the last 11 days.

What does that mean for investors?

Well, I think the obvious question is, has they gone, have they gone too far, too fast?

And we’ve seen a little bit of that, that’s a possibility.

Uh We’re seeing uh complacency in the market and that’s kind of being expressed by a low vix.

Let’s check out where the VIX closed today under a 13.

You can see it rose at the end of the day.

What happened with stocks at the end of the day?

Story continues

They also rose.

So maybe a little bit of a divergent there because when you see a higher Vix, usually that’s concurrent with stocks going the opposite way.

Uh But given the end of the day dynamic dynamics and also the fact that you can have volatility rising on the way up.

Uh Sometimes you do get those movements.

Now, here’s the move index, I’m going to put a year to date chart and this is a little bit different than the VIX.

The move is elevated off of its lows, whereas the VIC is V is ho hovering right by them that just tells you that the bond market isn’t quite as complacent as equities right now.

Uh Let’s check out the sector first and we’ll get back to the NASDAQ 100.

Everything in the green.

As you said, Julie Tech is the name the sector of the day.

Up 1.44%.

Also seeing some out performance by materials that was up 1.31%.

Even financials, which was the biggest laggard here was up a third of a percent.

And then when you check out the NASDAQ 100 what really jumps out is all of these mega caps.

In fact, the smallest stock that was down today looks like Costco or Netflix, somewhere in the upper, upper red.

I I should say the biggest of the decliners.

Anyway, you know, you take a look at Apple which was coming into the year under a bit of pressure.

It took months for it to get back up to break even now you check out what it’s doing, hitting record highs.

Let’s see if I can get a year to day chat.

There you go.

We’ve had just this incredible run over the last 2.5 months.

So one by one, even the mega caps that have been I experienced some, some downturns have come back.

And a great, another great story here is Tesla.

Look at how Tesla has come back.

Apple came back over the last 2.5 months Tesla came back over the last two weeks, just another run and you take on you tack on another one third of a percent getting pretty close to uh what I would consider the big resistance somewhere at 300 but not quite there just yet.

I also want to check out our leaders and we can see uh the SOS so that would be the Philly Chip index that is a big leader of the day, but close behind it, we have home builders and regional banks gearing up for uh big banks which kick off earning season this Friday.

Finally, I’m gonna leave you with a little bit of a dichotomy.

Here’s software and we can see actually about half to 3/5 of these uh were read on the day and then you compare that with semiconductors.

So even within the tech story, we do see these different dynamics of virgin Josh.

All right, Jared.

Thank you another day, another record close for the S and P and NASDAQ, the S and P 500 notching its 37th record close of the year so far for more on the markets we’re bringing in Marg Patel, senior equity portfolio manager at all.

Spring Margie, it’s good to see you.

Um So let’s talk about the earnings season.

Uh Listen, big banks on Deck Friday, what do you expect Margie for this earnings season?

Is it it, is it gonna be another catalyst for the market?

Well, I think it’s going to be another, uh, earnings season where the market does better because I think earnings will surprise on the upside once again.

Um, the GDP is growing, said maybe 1.5%.

But we think revenues of companies in the S and P will be up, say 4% earnings will be up 8 to 10% as a for the last few quarters.

So again, we think it’s a continuation of the strength of this, particularly the large cap stocks in the market.

Well, and that’s been the case.

Of course, we’ve talked a lot about that, Margie.

Um And how, once again today, for example, we’re seeing large caps, uh tech account for a lot of the gains that we’re seeing.

Um But what do you make of what we’ll see on the earnings front as we go forward from here?

Well, I think we’ll see more of the same.

I think those tech leaders particularly will continue to show very, very strong earnings.

I think that’s a long term trend that they’re in.

And I think we’ll see some of the other companies say in communications, some companies and industrials that are in those industrial sectors that have secular growth will also be up very strongly.

And unfortunately, the majority of names will just sort of slosh around because they really don’t have the dynamics to have those big earnings increases.

So more of the same.

Uh So it’s gonna be a tough year, a tough quarter for see, value investors.

And Margie though, just look at some of the, the names you like.

Um, some of these A I plays Margie and Via and Broadcom.

Um, do you want to book some profits there, Margie after the runs they’ve had and maybe redeploy that and, and other other names, other areas.

Well, the problem is, I don’t know of another area to redeploy that has such a, a relatively clear sustainable growth path to continue to have higher earnings in other sectors.

So that’s why we stick with the, with the tech names, the semi names.

Uh, they’ve been fabulous names and I think they’ll continue to be very, very good names.

Uh, there simply aren’t other places to go.

They have that, that type of growth and many of those stocks also have dividends.

So they really make a pretty attractive package when you’re talking to your clients right now, Margie.

Um, what are you hearing in terms of risk appetite?

Because, you know, obviously those names are the big growth names.

Traditionally, they do come with a little bit more uncertainty, a little bit more risk.

Are our clients?

Are investors just saying that’s fine with me right now.

Well, I think a lot of investors got left behind because when the fed began to raise rates back in 2022 the, uh, a lot of people thought, well, the best thing to do would be much more conservative get to value names out of high price growth names and the so called safe things like treasures.

And of course, that turned out to be exactly the wrong strategy.

Those sectors are left behind and the gross part of the markets are really shot ahead.

Why?

Because they had the fundamentals.

So I don’t see anything really changing here over the next few quarters.

And so you should just stick with the same things that have worked pretty much for the last year or so.

Mar, we’ve talked earnings le let’s talk, uh, the economy as well.

We do have AC P I print it’s coming tomorrow.

Margie.

How important is that for the market?

Uh, well, I’ve never really made money trying to predict how the fed will react to AC P I number.

But I think that the issue for the Fed is that they, uh, are disappointed that inflation has not come down the way they would have thought it should have come down, it hasn’t obliged them.

And yet on the other hand, there’s some signs here and there that economic growth for many companies is slowing down.

So I think there are betook in between.

Um, I don’t care whether it’s a good number or a bad number.

I think as the fed changes rates, it’ll be by a quarter of a point that really isn’t fundamentally going to change the economic outlook or the outlook.

I think for large cap tech stocks really?

And do you think that, uh, especially given what we heard from Jay Powell and his testimony before Congress, do you think the markets and the fed are finally on the same page in terms of how many cuts we’re gonna get this year and the timing of those cuts?

Well, I think that, uh, Chairman Powell has shown he’s, uh, pretty much like the rest of us investors, uh, more or less watching the market to tell him, tell him what to do.

And uh I think we might see just one cut.

Uh Typically they lag behind the data and the data says inflation is high, the economy is pretty good.

So I’d expect to see just one cup.

And then I think really as we get close to the election, I think they really are going to want to do anything.

They’d like to just be even key.

So I’m just looking for one cup, but they always could do two cups maybe one later in the fall.

All right, stay tuned.

We’ll see what they do, Margie.

Good to see you.

Thanks for joining us.

Coming up, Amazon’s prime day, less than a week away.

We’ll discuss with the E commerce holiday means for the tech giant, more market domination overtime.

Coming up, the Federal trade Commission is preparing to sue the nation’s three largest drug managers over tactics for negotiating prices for drugs including insulin.

This follows a two year investigation into whether the companies steer patients away from less expensive medicines.

The FTC plans to file lawsuits taking aim at the business practices related to rebates, brokered with drug manufacturers.

Joining us now with more is Yahoo Finance’s own Angelique Lani.

This has been going on for a little while here and it looks like it’s taking the next step.

That’s right, Julene, we know that the FTC just released their report after two years of looking at these pharmacy benefit manager managers, those PD MS, the largest of which are CV S, United Health as well as Cigna.

And so these companies are really under fire.

They’re really the target of the FTC after a very lengthy report that showed that they do increase drug prices.

Now, when this lawsuit will actually be filed is unclear, but we do know that the FTC is uh the likes of insulin, for example, we know that those three big drug makers as well.

Uh Eli Lily Novo Nodes and Sanofi are part of that.

Now, we did hear from CV S saying that they claim to have led the way in driving down costs as low as $25 lower than the Biden administration’s copay of 35 which we know is a result of the Affordable Care Act.

Now, this has been part of a drive down by the drug maker themselves.

Eli Lilly being one of the first to decrease the copay for certain types of insulin.

But there are other synthetics that still remain pretty high.

Now, the question of whether or not these PB MS do any good in helping to reduce cost is the question at hand we’ve seen, for example, at these Humira, if you take a look at the market share a year after biosimilars came on the market, we still see Humira take the lion’s share of the market even.

So they were listed at the same tier as the formula, which is how these PB MS uh sort of decide which drugs are top tier and the like and covered the most in your plan.

So that just shows that despite the fact that there was competition on the market, it didn’t do much to budge Avi’s leads.

So that is really the question at hand is if there are, if they are in fact supposed to be doing their job, why haven’t we seen the lower prices and why haven’t we seen market competition take place?

And that’s sort of what the FTC is looking at.

So again, the report from the Wall Street Journal not giving us much more political, also reporting that it will be beyond insulin.

But that is one of the key focuses for the FTC at this time.

And this is not the first time that the PB MS have come under fire, right?

So we’ve got this FTC investigation, but there are members of Congress who have tried to introduce legislation to try to further regulate this industry.

Right.

That’s right.

And we’ve seen over the years if you will a blame game between the different parts of the health care industry.

And so Congress has been a part of trying to figure out where exactly the levers are that increasing prices for Americans and why the US ends up paying more.

If you talk to drug makers, they will blame it on these pbms saying that in order for them to include a rebate, they have to inflate the prices.

Meanwhile, the PB M is saying, well, it’s on the drug makers to decide whatever they want to do and insurers of course, then pointing in both directions.

So we’ve seen a lot of this, we’ve seen Congress try to tackle this with various bills over the last few years.

And so really the entire government is trying to figure out how to exactly find the right levers to pull.

So as not to unintentionally increase prices all over again.

All right.

Thank you, Ange.

Appreciate it.

One of the biggest online shopping days of the year is almost here.

Amazon’s annual prime day is set for July 16th and 17th.

Mark your calendars joining us now is Melissa Otto TMT, analyst for S and P Global Visible Alpha.

Uh Melissa, it is good to see you.

So prime day, it’s here getting ready to fill those carts.

Melissa, what are your expectations uh for this year?

What kind of growth are you expecting?

Now?

How is this prime day?

How is it different, Melissa, if at all?

Thank you.

I’m excited to use Rufus the new chatbot to help me with my shopping list.

How about you?

Um, in terms of expectations, you know, I think the North America retail business, it’s never really been a very profitable business for Amazon.

However, that started to change at the end of last year and coming into this year, uh based on S and P global, visible out a consensus, we’re expecting 6.3% operating profit margin.

And for that to jump to almost 10% over the next three years.

And you know, revenues just aren’t staying still either.

Revenues are expected by the end of 2027 to hit $500 billion.

So that would mean that Amazon is generating about 10% top line growth in their North America retail business year on year.

So I think expectations are pretty robust for that business.

I I in answer to your question about Rufus Melissa, since you asked, I don’t know if Rufus fixes the problem that I have with Amazon and I’m a big Amazon prime customer to be clear, which is there is just so much for lack of a better word crap on Amazon.

There’s so much stuff you’re drowning in it.

You don’t know what to buy.

It’s not curated at all.

That is what has always drive me, driven me nuts about Amazon.

I don’t know if Rufus fixes that problem, you tell me what you think and what you think, maybe how they’re gonna leverage it.

Rufus tries to get us one step closer to solving that problem.

100%.

Yeah, it is just overwhelming.

Especially if you don’t.

You’re like, well, you know, I kind of need a gift.

I’m not really sure what it is.

It’s for a 13 year old boy.

You know, it could be anything right.

But I think Rufus does a pretty good job of offering up a couple of solutions and you can keep curate or you can keep iterating on your search and it will keep um narrowing down the type of suggestions that it’s giving.

Uh I’ve recently used it uh for party recommendation, party favor recommendations and, and for a few gift items and it found it pretty useful, but I had to iterate a couple of times, Melissa while we got you.

Let’s switch to some other um some other trends and themes.

I I know you watching um for example, in tech uh P CS, Melissa and who knows, maybe, you know, people were buying those prime day uh P CS.

Obviously, we saw this, we saw the surge um during the pandemic Melissa, we were all at home working or a lot of us were um now a lot of focus on A I enabled P CS.

Do you think that creates a tailwind for the broader industry?

That’s the million dollar question is this going to be the iphone moment are uh A I laptops A, the A I in um Apple, next generation Apple smartphones, is that going to be a catalyst for both enterprises and consumers to trade up to gen next generation hardware?

Uh I think that’s something we’re watching very closely in terms of expectations.

Um based on consensus, consensus is already expecting Apple to generate smartphone units sales over the next, uh at the end of the next two year cycle, um that will basically meet and ultimately surpass the previous cycle.

So I think that’s already um something that’s getting baked in laptops are trading at about, um are, are estimated to be about a 15 to 20% below the previous cycles.

So it’ll be interesting to see how that shakes out and if the A I laptop boom could ultimately uh be a real catalyst.

Yeah, I think that’s really a question here, Melissa.

And I’m curious what you’re seeing in your research because it feels like like the A I stuff right now is a push, right?

It’s not a pull from consumers.

It’s a push from hardware and software companies and it doesn’t feel like um, consumers quite know what to do with it yet or how it’s gonna integrate into their daily lives.

How is that gonna sort of play out as these products roll out?

I mean, that’s, you know, it’s an interesting dynamic in the market, right?

Now, is it going to be consumer driven or enterprise driven?

It, it feels like we’re seeing a push and a pull at from all angles and we’re trying to figure out exactly what’s going to stick and create that broad adoption.

What’s going to be that, uh, use case that really gets the world excited about generative A I, you know, I think we’ve, we’ve seen um, the chat GP T applications, chat bots showing up in places like Amazon and Expedia.

But what else?

And how can it make our lives more productive and efficient?

What tools will, will start to come about that could ultimately make consumers and enterprises want to upgrade to, to the next hard hardware cycle.

Melissa, thanks so much.

Good to see you.

Great to see you too long awaited by investors here.

Your Costco membership is getting more expensive.

The company announcing it will raise its annual membership fees by $5 in both the US and Canada Costco last raised the price of membership back in 2017.

Costco also reported its net sales for the month of June at $24.48 billion.

That’s a nearly $2 billion increase from the same period last year.

But it is really that fee increase.

As I said, Josh, investors have been waiting for this one.

We’ve had a couple of people on goodbye or goodbye who have liked Costco, but have said that that’s the next catalyst.

That’s gonna call it.

Did they say this is when it’s happening?

No, nobody knew what it was gonna happen.

They just for it to happen.

They’ve just been waiting for it to happen.

It’s been so long.

Yeah, June, so June total comp says it looks at 5.3% estimate was 6.4%.

But clearly investors are cheering that news.

That, that’s the headline, that’s what’s setting it up here in the after hours, at least initially.

Yeah.

And by the way, the membership increase will be effective.

September 1st.

Um So if you’re a Costco member as they call it or a customer, um that, that is when it’s going to take effect here.

Um But that’s really a lever that people were waiting for, as you say, the comps higher here.

If you look at, let’s see, Costco shares year today just taking a quick look, they’re up by 34% are already this year and rising again.

Um In the after hour session, I’m gonna check to is that a not quite a record close today?

It looks like it might have been a record close yesterday for Costco before we saw a little bit of a decrease in today’s session.

But you know, if, if the after hours gains hold, we could potentially see a record again on the back of this news.

All investors like what they see uh time now for what to watch.

Uh Thursday, July 11th starting off on the economy.

Some key pieces of economic data coming out this week starting with CP I.

That’s the consumer price index print for June out in the morning.

Economists forecast overall CP I to tick up, uh 0.1% CP I steady at 0.2% and moving over to earnings.

Another earning season kicking off this week, Pepsi progressive Delta Airlines can a they all report tomorrow.

Delta will announce second quarter results in the morning.

Analysts expect the airlines profit to be affected by higher wages and lower fares.

Shifting to the fed more fed Conor tomorrow from a couple of fed.

President is after Fed Powell wrapped up two days of congressional testimony earlier today, Powell highlighting a slowing job market as a potential rate cut hangs in the balance.

And finally, President Biden will be giving a news conference tomorrow at the NATO as the NATO summit in DC.

Wraps up.

The conference will be another key test for Biden as fellow Democrats and donors continue to question his ability to serve a second term that do it for today’s market domination over time.

Be sure to come back tomorrow at 3 p.m. Eastern for all of your coverage leading up to and after the closing belt.

But don’t go anywhere on the other side of the break.

It’s asking for a trend.

I’ve got you covered for the next half hour, the latest and greatest market moving stories so you can get ahead of the themes affecting your money.

Stay tuned.

It’s a jam packed.