We kick off the trading week, we are seeing plenty of volatility in the AI trade right now.
We are looking at Nasdaq futures lower and this does come a day after tech powerhouses soared.
But the broader economy here in the US is flashing some warning signs that June hiring for non-farm payrolls slowed sharply to just 57,000 jobs, while losses and leisure hospitality despite the anticipated World Cup boost and now all eyes turn to the Fed for the first meeting that under new chair Kevin will joining us this morning to connect the dots.
Eric Criscuolo, who's market strategist for the New York Stock Exchange.
Eric, good morning.
Thank you so much for joining us.
Good morning, Remy.
Always a pleasure.
Well, here we are on this Tuesday morning.
We are looking at the Dow futures higher by at least 200 points, but Nasdaq futures pulling back.
So what do you make of what's happening with the AI trade given all the volatility?
Yes, you know, it's continuing to evolve.
You know, it's lurching, right?
It lurches from, you know, one day it's everyone into memory, everyone into semis, and it lurches.
Back to forget that everyone into hyperscales, right?
So it's kind of moving back and forth.
The Samsung earnings overnight were very big.
They were incredible earnings on the headlines, right, on the growth rates.
Unfortunately for Samsung and other tech companies, that's expected.
So you have to clear an extraordinarily high bar even when you have these great results like Samsung did.
The stock was sold off about 78% overnight in the Korean market, so.
The ability of these stocks to continually compound these enormous returns is getting harder and harder just because of the law of large averages or large numbers.
It's getting really harder to beat the insane growth rates that have come previously.
Yes, and this does come ahead of the official start to earnings season next week.
So I do want to take a pause and look at the latest economic data.
So last week ahead of the holiday weekend, we did get that jobs report.
So headline nonfarm payrolls did come in weaker than expected, but we saw the unemployment rate tick lower to 4.2%.
We have to keep in mind the participation rate as well as the wage.
Growth.
So what does that tell you about the US economy?
Yes, there's so many moving parts to all of these numbers, but you have to really dig deep inside and see what's going on.
But you know, generally speaking, like you said, it was a weaker print, the jobs data last week, and it wasn't terrible, but it was definitely weaker than what everybody thought and what was posted before.
We'll see what the revisions come up.
With later, but you know it shows that the labor market, it's holding steady.
It's it's not fantastic.
Maybe it's coming in cooling a little bit, and that, you know, you saw the markets kind of reprice their expectations for Fed rate hikes.
They went from looking like maybe 2% this year, maybe now it's like 1 to 2 around maybe 1%.
So those numbers are coming in a little bit.
You know, I don't know if I know one data point will not sway the Fed one way or the other, but besides all that, we still have a lot of stuff that's coming from the Fed or expected to come from the Fed with Warsh's task forces.
He's got about 20 of them, I think, looking at all sorts of operations that the Fed is doing, how they conduct monetary policy, how.
They communicate with investors and the public, the data that they look at.
So all of these things investors have to kind of wait and see what these task forces will come back with, which you should start trickling in over the next few weeks.
And then we can maybe get a gauge of kind of what the Fed or where the Fed might be going or where it wants to go.
Yes, and Eric, tomorrow afternoon we will be getting the Fed minutes from the latest.
The first one that Fed Chair Warsh ahead, so that will be something that we'll pay attention to.
But as you mentioned, inflation is something that will keep our eyes on and that will also determine the rate trajectory for the central bank.
And right now we are paying attention to what comes out from the NATO summit as well.
But given all of the noise out there, how are you finding signal?
How am I finding what?
How are you find signal amidst all the, no, it's that that's the ultimate question, right?
And, and, and, uh, it's, you know, basically it just comes back to just kind of taking a step back, I think, and just looking at like what the market is doing in a broad sense, right?
If you look at, look at yields, right, yields are, they're high, they're, they're stubbornly high, they're not really coming down a lot.
So they're stubbornly high.
The market though is holding up, right?
The S&P is just under its all-time highs.
The Dow just made an all-time high.
So you're kind of looking and seeing, OK, what's actually going on, you know, just at a 30,000 ft level, and you're seeing kind of money flow from an AI trade specifically into other sectors of the economy, other sectors of the market.
That's why the Dow Industrials is having such a good, you know, recent run.
The non-AI trade is becoming firmer, right, where some of these companies that are.
Exposed to manufacturing and cyclical more cyclicality, financials, the banks, they're doing well right now, especially going into earnings.
So just kind of just paying attention to what the market is trying to tell you based on the price action, that's certainly very helpful and it can get lost in the noise.
So I think there's a lot of signal there.
And then also just being rational and just not jumping from data point to data point and just looking at everything in totality as it comes.
And if you have to change your way of thinking or your framework, you know.
Be OK to do that, but also make sure that you're doing it for a specific reason, a very good reason, and not just because the latest data showed you one thing versus what you kind of thought.
And I do have to say that we did see quite a performance from the major US stock averages for Q2 of this year as well as the first half of 2026, but we're already starting off the 3rd quarter as well as the second half of this year.
So how are you heading into the second half in terms of your outlook?
Yes, I think it's going to be really interesting like we said, you know.
The Samsung earnings price action, right, that might be a tell as far as maybe tech might have a little bit of a problem as far as you know getting some of these, you know, great gains after their earnings season, but one step back, the banks will report first.
They're coming out next week.
Those are obviously the bellwethers for the for the economy at large, right?
Not just tech, but what are consumers doing?
Mortgage is doing.
How is credit going?
They've been pretty positive about what they see in the economy, at least last quarter they were.
Credit loss is very small, not a lot of credit concerns.
If that continues, that's good for the economy overall.
It's probably good for the other industries, not the tech industries per se, but the other industries that we talked about.
And then, you know, just kind of looking at that and going, OK, they're setting a good base, and then what happens if tech can't get those gains that they've seen?
Does the money flow into those other sectors going forward?
Well, a lot to keep in mind as we head into the second half.
So I appreciate your time today.
Thank you so much for all of your insights.
Always a pleasure, Remy.
Thank you.
