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The market is in a tug-o-war between the bummer that rates are likely to stay higher for longer and excitement about the earnings season and artificial intelligence.

The launch of this earnings season has so far saved the market from a selloff that began at the beginning of April when the interest rate prognosis soured. Sticky inflation and a Fed that appeared to lose its resolve to cut rates this year spoiled a five-month rally. But earnings are reviving the market.

V.F. Corporation (VFC) reported a 13% revenue decline to $2.4 billion, missing expectations. Sales were down across the company’s brands, with North Face sales down 5%, Vans 26%, Timberland 14%, and Dickies 15%, with all regions seeing declines, led by a 22% drop in the Americas. Adjusted operating margin fell to -2.1%, with EPS at -$0.32 vs. $0.17 a year ago. On a slightly better note, inventory fell $382 million from Q4, and net debt is down to $5.3 billion. While CEO Bracken Darrell emphasized ongoing turnaround plans and leadership rebuilding, analysts downgraded the stock as the company’s $1.7B in debt maturities could lead to potential asset sales and dividend cuts.

As we like to say “up is good,” so last week’s snapback from the major indexes and many stocks and sectors is certainly a good thing, and we like that many stocks have actually built six- to 10-week launching pads. Thus, if the rally can continue, there should be plenty of names to sink our teeth into assuming earnings season goes well. However, first things first: The market and most stocks aren’t out of the woods yet, having “only” rallied back into resistance, and earnings season is still in full swing. We’ll leave our Market Monitor at a level 6, but we’ll change that quickly if the bulls show some follow-on buying.

This week’s list is a hodgepodge of earnings winners, resilient growth names and some commodity ideas as well. Our Top Pick is a volatile chip equipment maker with a system that’s perfectly suited for the AI revolution. Earnings are due next week, so keep it small here and see what the quarterly report brings.

After falling 4-6% two weeks ago, the S&P 500 and Nasdaq bounced back by 2-3% last week. Quite the whipsaw! By week’s end the S&P 500 had gained 2%, the Dow had risen marginally, and the Nasdaq had added 3.3%.

Shares of Soleno Therapeutics (SLNO) are rallying today after the FDA granted the company’s lead drug candidate (DCCR) Breakthrough Therapy Designation for the treatment of adults and children ages four years and older with Prader-Willi syndrome (PWS). The award was based on data from the Phase 3 program and it means accelerated review of DCCR. Recall that we are awaiting submission of an NDA for DCCR in mid-2024, and eventual FDA approval (which is now expected to happen more quickly) would mean Soleno can begin selling the therapy. Like most biotech stocks, SLNO can move around a lot. Today’s action shows why frustrating drawdowns on no news (like the one over the last three months) can “not really matter” when good news strikes. Will keep SLNO at hold and look for follow-through. HOLD

It’s been a great market for a while. But it has leveled off since the middle of May. I expect more of the same going forward.

The S&P 500 pulled back in early April after a five-month rally as sticky inflation soured the interest rate narrative. The index then recovered to new highs in the middle of May on an improved interest rate outlook. But stocks have since leveled off as the interest rate outlook got stuck in the mud.

With the market at new highs but with narrow breadth, what’s happening with growth stocks these days? Mike Cintolo sits down to offer up some answers.

It was a down week for the market as the Dow initially led the indexes lower early in the week, then was followed by the Nasdaq later in the week. Though on a positive note, the market rebounded nicely from its lows on Friday afternoon.

By week’s end the S&P 500 was down marginally, while the Dow and Nasdaq both lost 1%.

The market has leveled off since the middle of May. I expect more of the same going forward.

The S&P 500 pulled back in early April after a five-month rally as sticky inflation soured the interest rate narrative. The index then recovered to new highs in the middle of May on an improved interest rate outlook. But stocks have since leveled off as the interest rate outlook got stuck in the mud.