Stock market today: S&P 500 set to build on record high with Powell on deck

US stocks were poised to resume their record-setting climb on Tuesday, as investors assessed concerns about a pullback in the wait for Federal Reserve chair Jerome Powell to speak.

S&P 500 futures (ES=F) edged up 0.2%, while those on the tech-heavy Nasdaq 100 (NQ=F) led the way higher with a 0.4% gain. Dow Jones Industrial Average (YM=F) futures were little changed.

Stocks have ground out fresh all-time highs as signs of a US economic slowdown bolster bets on interest-rate cuts. The benchmark S&P 500 (^GSPC) booked its 35th record close of the year on Monday, while the Nasdaq Composite (^IXIC) took out a record of its own as chip stocks outperformed.

Powell should shed light on the Fed’s picture of the economy when he gives his twice-yearly policy update to Congress, starting Tuesday with an appearance in the Senate. Testimony to the House follows the next day, setting the stage for a key update on consumer inflation on Thursday — all potential catalysts for stocks if they confirm a cooling.

But a note of caution is seeping into the market as the idea of a summer pullback gets more backers, with Morgan Stanley strategist Mike Wilson calling for a 10% correction.

Wall Street is getting cold feet about this coming earnings season, given the higher bar of expectations they face this time around. At the same time, investors are starting to question the huge inflows into AI-linked stocks that have driven the recent rally, given the tech‘s impact is still unproven.

On the corporate front, BP’s (BP) US-listed shares fell over 4% in pre-market trading after the energy giant warned of a refining slump and factory-linked writedown of up to $2 billion. Meanwhile, Novo Nordisk (NVO) stock slipped after Wegovy lost out to Eli Lilly’s (LLY) Mounjaro in an analysis of rival weight-loss drugs.

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    Interesting observation on Chipotle

    Chipotle (CMG) continues to be a beloved brand, despite TikTok posts suggesting the chain has cut back on its notorious giant portion sizes.

    Interestingly, the company’s $15 bowls and $10 burritos appear to be more beloved by lower-income households.

    Stifel analyst Chris O’Cull coming in hot with this research today:

    “After reviewing mobile location data suggesting strong traffic performance in 2Q, we raised our same-restaurant sales projection to 10% from 8.5% (Street 8.8%). Interestingly, while the strength continued the broad-based trend from 1Q, growth from lower-income consumers outpaced growth from middle- and high-income consumers during the quarter. Given industry comments about weaker spending by lower-income consumers, we believe the positive value perception of CMG across all income segments contributed to the traffic performance.”

    O’Cull reiterated his buy rating on the stock.

    Lower income households flock to Chipotle given greater value perception.Lower income households flock to Chipotle given greater value perception.

    Lower income households flock to Chipotle given greater value perception. (Stifel)

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    Morning Apple vibes

    For those of you keeping score at home: Apple’s (AAPL) market cap is now at $3.5 trillion and Nvidia’s (NVDA) is at $3.15 trillion.

    To that end, good note out this morning from Piper Sandler analyst Matt Farrell after a 30% run in Apple since April:

    “Since early April, Apple is up over 30% (compared to S&P500 up over 5%), on the back of 1) Apple Intelligence excitement and 2) a potential bounce back in iPhone shipments in China. From our perspective, the excitement is warranted, as AI could be a needle mover for upgrades. In addition, a return to growth in iPhone sales in China could create a tailwind as well in the second half. However, given the current valuation (~32x near-term consensus EPS) and the growing risk of a consumer spending headwind, we feel like a lot of good news is already priced into the stock.”

    Farrell is sticking with a neutral rating on the stock.

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