SanDisk Slashed, Micron Mashed; Jobs Day Forecast; And Are You at Your Desk?
Let’s look at the beating taken by memory stocks yesterday, the shot at a September rate cut, jobs day , and how July 4 week used to work for traders.
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Congratulations. It’s June Jobs Day. This is the day that both economists and traders have been looking toward all week. At least those economists and traders who remained at their desks as the week wore on. This is likely as much as anything else, what created an aura of risk and provoked a rotational round of short-term profit taking across the semiconductors and especially the memory / storage trade on Thursday. What risk, you ask?
Understand that years ago, when an extended holiday weekend would show up, that traders and investors would head for the beach. At the leading investment banks and broker-dealers, senior people would be out, leaving junior people in charge. The reduced participation would cause increased volatility.
Conversely, at smaller broker-dealers or “boutiques” the senior people (decision makers) would never take these days off because these days often present both opportunity and danger. Because of the reduced participation, however, these decision makers would often give their junior people the day in expectation of reduced participation, which in turn slowed the activity even further.
Fast forward to 2026. All of the above type firms have reduced human staffing and for days such as this, those who wish, can head for the beach and maintain an algorithmic presence. For these folks, a “set it and forget it” mentality can take over and it often does. They’ll only get involved, from their mobile devices if they receive an alarm that they have pre-programmed themselves or if they get a frantic call from the poor kid who remained on the job. (In which case, said poor kid will be blamed for any negative outcome).
Hence, how keyword-reading algorithms read this morning’s job-related headlines and how much momentum they can create through forced artificial inefficiency at various points of sale will matter more to Thursday’s version of price discovery than actual demand and supply. You see, back when dinosaurs roamed the earth, floor traders, who basically fought over Spanish pieces of eight (sometimes 16ths and even 32ths), got paid by putting large buyers together with large sellers. When it worked, they were not part of the trade.
What happened there was that the purity of the price discovery process was a point of pride in itself and was lauded as a goal above all others. The more stability one could bring to a marketplace, the more one could attract key clientele. It wasn’t selfless, but the model itself rewarded thoughtfulness and balance.
What we have now, is a process as algorithms have replaced human traders that rewards those running the business when they can create an environment where buyers and sellers miss each other in real time at the point of sale. In other words, buyers pay more and sellers receive less. They charge little in the way of commission and the public remains ignorant of the changed model. The volume is higher, you say? Of course it is…. because the organic trade between buyer and seller has been replaced with a process where they no longer trade with each other.
This Morning Matters…
This morning’s June employment survey results, in essence, could matter far more over the medium to long-term to investors and to the economy than what short-term algorithmic profit chasers do to the market in real-time. The Department of Labor’s Bureau of Labor Statistics will release these results for June at 8:30 a.m. ET, an hour ahead of the opening bells down at 11 Wall St. and up at Times Square.
Consensus view is for NFP job creation of roughly 100,000 positions for the month. Readers can see below that I expect to see the creation of 114,000 new jobs for June. If I am correct, or even if economists, broadly, are correct, though down from May’s print of 172,000, this would be a fourth consecutive month of respectable job creation.
There is some concern that the unemployment rate (U-3) could rise to 4.4% from 4.3% as the end of the school year brings new participation to the labor force. I am not expecting to see headline change to the unemployment rate nor to the participation rate, but I am cognizant that there is a threat here and keyword-reading algorithmic traders may move on those changes. Though I am still at 8.1%, I think this poses an upside risk to the underemployment rate (also known as U-6 to my fellow macro-nerds).
Of course, if this report does show a healthy enough labor market situation for June, that would solidify the expectation that rate cuts are likely off the table for the rest of 2026. The Federal Open Market Committee would need to see real weakness to re-open that door and nobody wants that. Could a strong report push Warsh & Company through the threshold of increasing short-term rates anytime soon? Fed Funds futures markets trading in Chicago see a 63% probability for such a rate hike on Sept. 16.
On that note, crude oil prices have moved sharply lower in recent weeks, and this will slow the march of both producer- and consumer-level inflation. Inflation and price stability matter most right now to new Chair Kevin Warsh and just look at that band of misfits at the Federal Open Market Committee. He is the smartest kid in the room, and it may not be close. He’ll have to temper this economic condition with the fact that any rate hike immediately impacts, in a negative way, about a quarter of the federal debt load, so almost $10 trillion out of about $39.4 trillion.
Fun Facts
1) The Chicago Fed’s model shows the current unemployment rate at 4.36%.
2) The Cleveland Fed’s model shows June headline CPI at -0.06% and July headline CP projected at -0.19% on a month over month basis. Numbers like that would drop year over year CPI growth to 3.92% and 3.52% respectively. Headline CPI ran at growth of 4.2% for May.
Marketplace
Headline level equity indexes ran in a southerly direction on Wednesday, led lower by weakness across the technology space. Underlying breadth, however, was not nearly as weak as was that headline performance. For the day, the Nasdaq Composite lost 0.66% while the S&P 500 gave up 0.22%. But the Nasdaq 100 suffered a beating of 1.54%, pressured by a Philadelphia Semiconductor Index that was just punished for a beat-down of 6.27%.
The memory / storage trade was pummeled especially hard as SanDisk (SNDK) and Micron (MU) each gave back 10.6%. Yes. They both lost 10.6%. Think a bunch of ethnic kids from the boroughs of New York City, yelling at each other, pushing each other and stabbing each other with sewing pins could do that? See what I mean about algorithmic momentum running? Small- to mid-caps gave back some ground as well, while the transports and the banks traded higher.
Breadth
Surprisingly, yes surprisingly, winners beat losers at the NYSE by a rough 4 to 3 margin and by about 5 to 4 at the Nasdaq. Seven of the eleven S&P sector SPDR ETFs closed out the Wednesday session in the green, led by communication services (XLC) and the financials (XLF). Cyclicals clearly outperformed defensives, which has to be taken as both a market and economic positive.
Outside of Tech (XLK), markets really did not do badly on Wednesday. Advancing volume? Not that bad at all. Took an even 50% share of composite NYSE-listed trade and a 50.5% share of composite Nasdaq-listed activity. Aggregate trade was markedly lower on Wednesday ahead of the June jobs data as some of the folks mentioned above went into “set it and forget it” mode and hit the beach.
June Employment Situation (08:30 ET)
Non-Farm Payrolls: Expecting 114K, Last 172K.
Unemployment Rate: Expecting 4.3%, Last 4.3%.
Underemployment Rate: Expecting 8.1%, Last 8.1%.
Participation Rate: Expecting 61.8%, Last 61.8%.
Average Hourly Earnings: Expecting 3.4% y/y, Last 3.4% y/y.
Average Weekly Hours: Expecting 34.2, last 34.3 hours.
Other Economics (All Times Eastern)
08:30 – Initial Jobless Claims (Weekly): Expecting 220K, Last 215K.
08:30 – Continuing Claims (Weekly): Last 1.821M.
10:00 – Factory Orders (May): Expecting 2.1% m/m, Last 4.8% m/m.
10:30 – Natural Gas Inventories (Weekly): Last +76B cf.
1:00 p.m. – Baker Hughes Total Rig Count (Weekly): Last 573.
1:00 – Baker Hughes Oil Rig Count (Weekly): Last 440.
The Fed (All Times Eastern)
No public appearances scheduled.
Today’s Earnings Highlights (Consensus EPS Expectations)
Before the Open: LNN (1.21)
At the time of publication, Guilfoyle was long SN DK, MU equity.
