(Justin Vaughn, Editor, Options Trading Report)
This week’s menu is again filled with several pertinent reports. Tuesday will see the release of the Case-Shiller Home Price index for June, with The National Association of Realtors releasing its “Pending Home Sales Index” for July. The NAR report will focus on ‘housing activity’ as both releases will define the present housing market conditions. Also coming up after market close on Wednesday will be the much awaited earnings report on ‘America’s favorite stock…Nvidia.’ The Bureau of Economic Analysis will reveal the PCE (Personal Consumption Expenditures price index). Estimates by economists and strategists expect the index to rise to 2.7%, a tenth of a point higher than the previous month.
Stocks were stronger on Friday after Mr. Powell stood ‘hard’ on the proposition of a rate hike, putting to bed the lingering question that it will occur, not giving any indication of when, just soon. The Dow Jones Industrial Average soared 462 points, or 1.1% closing at a record high finish Friday. Powell’s famous 4 words, spoken Monday, “the time has come,” were music to investors and traders ears. He also signaled that the economy is slowing as is labor, and that “rate cuts are justified”. As per usual, bonds slide back, as the 10-year Treasury fell to 3.806%. The dollar continued to slide, as the yen struggled giving U.S. tourists a travel advantage. The Bank of Japan began raising rates this month, hopefully giving the yen stability after nearly three decades of falling value.
Monday’s market was listless as the indexes were flatline all day with the Dow Jones finishing up 65 points with interest peaking to blue chips and value equities in general. The S&P 500 and Nasdaq Composite declined 0.3% and 0.8% respectively, as techs and chip stocks took a ‘breather’.
Turbulent trading Tuesday didn’t slow the Dow Jones Industrial Average from hitting another record high-the second day in a row, as the index is attracting value and blue chip buyers, flush from taking profits out of the many technology and chip stocks that have driven to untold highs. Again the S&P 500 and the Nasdaq ‘treaded water’ unable to develop any traction. Both indexes have been riding the ‘flatline’ waiting out Mr. Powell and his colleagues with soon to be released economic data. Wednesday’s market was again lackluster giving way to another flatline finish. As August closes, all three indexes have shown great gains so far this year: after 8 months of 2024 the Nasdaq Composite and S&P 500 are each up 18% with the blue-chip Dow Jones Industrial Average up 9%. “The real takeaway from Powell isn’t that things are bad, it’s that we’re worried things might get bad,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. Thursday opened with the Dow Jones on fire spurting 200 points and hitting another record, while both the S&P 500 and Nasdaq lost ground.
Gold climbed higher Monday, reaching $2,550 an ounce and now up 23% this year leading the Nasdaq Composite of 18%. Many “central banks.” have been accumulating gold such as; Turkey, China, Kazakhstan, Czech Republic and Singapore. According to Bank of America, gold has now become the world’s largest reserve asset second only to the U.S. Dollar. Gold closed Thursday at $2,551.30, down $9.00.
RUMBLINGS ON THE STREET
Joerg Wuttke, former president of European Chamber of Commerce in China and now a partner at DGA Group, WSJ – “Everybody makes stuff in China. But nobody makes money.” Referring to existing tariffs and coming tariffs.
Jonathan Pingle, USB economist, Barron’s – “I love the United States of America, and I think we are the greatest country on earth, and I am optimistic about our future, however when I look at our Federal budget, the outlook is pretty dire.”
Craig Holman, a government affairs lobbyist for Public Citizen, Barren’s – “Billionaires are fundamentally reshaping the whole political environment,” he said. “They carry a whole lot of influence and seem to be asking specific favors in return for their money.”
Steve Sosnick, Interactive Brokers chief strategist, Barron’s – “We’re heading into a seasonally difficult period with a series of potentially market-moving data points–with a significant amount of good news already priced in,” adding he’s feeling a “bit cautious,” these days.