Stocks had another “mixed-bag trading day” yesterday, with the Dow up and the Nasdaq down. More on why that’s happening in a minute. Meanwhile, most other markets – from bonds to precious metals to currencies – are relatively quiet this morning.
The Federal Reserve’s two-day policy meeting is now underway in Washington. We won’t get the results of their deliberations until tomorrow, when Chairman Jay Powell and company reveal whether they decided to cut by 25 basis points or 50. But either way, a series of cuts is coming – and the cycle will likely extend well into 2025.
That has led to big gains for Treasury bonds, gold, rate-sensitive sectors of the stock market, and small caps. I went into more detail in yesterday’s MoneyShow Chart of the Week feature HERE. But if you look at the table below, you’ll see the Utilities Select Sector SPDR Fund (XLU) is now trouncing the Technology Select Sector SPDR Fund (XLK), up around 27% versus 14% year-to-date.
Source: Weiss Ratings
Zoom into the shorter-term (last 60 days), and you can see the iShares 20+ Year Treasury Bond ETF (TLT) has jumped 10.2% and the SPDR Gold Shares (GLD) has climbed 8%. The iShares Russell 2000 ETF (IWM) is also up 8.3%. As for XLK, it lost 5.7% during that two-month stretch. Rotation nation indeed!
Microsoft Corp. (MSFT) has decided to throw a LOT of money at shareholders, announcing a new $60 billion stock buyback program and a 10% hike to its dividend. The new quarterly payout of 83 cents per share will take effect in November, while the buyback replaces a previous program that began in 2021. In the most recent fiscal year that ended in June, Microsoft spent $17 billion repurchasing its own shares. MSFT is up around 17% YTD.
There hasn’t been a lot of good news coming out of Intel Corp. (INTC) recently. But the stock is popping today after the chipmaking giant said it would produce Artificial Intelligence (AI) chips for Amazon.com Inc.’s (AMZN) cloud services division. Intel’s foundry business will make the product, and will be set up as a subsidiary now – something that could foretell a spinoff down the road. Intel also said it’s halfway through a hefty 15,000-employee layoff program designed to cut costs.
