(Justin Vaughn, Editor, Options Trading Report)
After a wild market all last week, up and down and topsy-turvey, who would believe it was the best week of this year, yet it was!! Peaks and valleys turned into consecutive daily gains with the indexes all positive. The Dow Jones Industrial Average, for the week added 2.9%, while the S&P 500 was up 3.9%. The heavy technology Nasdaq Composite led all indexes with a surge of 5.3%, the biggest advance since November 2023, picking up steam during Tuesday’s Session. Expectations by economists and strategists that the CPI would come in at the same or a lower number and that retail and wholesale prices would come in on par as last month, gave a boost to the market. It was the kick-start that investors and traders were waiting for, as the market permeated positiveness with stocks showing gains in nearly every sector in all three indexes. The expected data fueled buying amidst a hesitant market environment. “The market’s is really in knee-jerk mode right now to incoming data,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. With all the good market news and reaction, investors are adjusting just how large the rate hike will now be, and would the Fed propose a half a percentage point or a quarter percentage point at their August 17-18 meeting. Bond yields have traded up with the 2-year Treasury setting at 4.064%, up from the previous Friday of 4.054%. The 10-year Treasury softened, down 0.051% to 3.891%.
All three indexes finished in the positive Monday with a boost of enthusiasm, the S&P 500 slightly up 1%, while the Dow Jones Industrial Average up 0.6% and the tech-heavy Nasdaq Composite up 1.4%. According to Bespoke Investment Data, the S&P 500 is now up for 8 straight days- its “longest streak” since November 2023, as the market shrugged off inflation worries. Inflation and consumer spending are ‘on the table’ as Mr. Powell heads to Wyoming to meet with the governors. A leading financial powerhouse Goldman Sachs now see little likelihood of a recession, with Mr. Powell instituting a rate cut yet this September. As the Democratic Convention gets underway Monday, much interest is building about Kamala Harris’ financial policies and the short and long-term effects on an economy that has endured a severe pandemic and has emerged, with controlled inflation.
Tuesday’s market took a pause as all three indexes were stalled just below flatline, finishing the session lower and ending 8 days of an upswing market. The center of attention fell to Jackson Hole, Wyoming, and Mr. Powell and the many anticipations of that meeting, to be released Friday. Crude oil was again weaker, falling for the third straight day reflecting a mild energy ‘sell-off.’ Gold is continuing to build momentum, hitting $2,520 on Tuesday, now up 20% this year, showing no signs of weakening. Pushed by expectations of a rate-cut and a strong dollar, plus a continually weaker Yen, U.S. and worldwide investors, overwhelmed by political and war skirmishes, have turned to gold, as a safe haven, and investment. ING analysts said in a note, The war in Ukraine and the on-going conflict in the Middle East, alongside tensions between China and the U.S. suggest that safe-haven demand will continue to support gold prices.
The indexes all demonstrated a flat market on Wednesday as nearly all sectors struggled to gain traction, in a wait-and-see-environment as Friday’s release looms closer. The Bureau of Labor Statistics revealed numbers previously released in March, contained major discrepancies and indicated that a softening Labor Market was starting then. “Despite this downward revision, that’s still a very healthy growth rate in terms of the monthly jobs added to the economy,” said Omar Sharif, Inflation Insights President, as told to Yahoo Financial.
RUMBLINGS ON THE STREET
Richard Bernstein, CEO and chief investment officer of Richard Bernstein Advisors, Barron’s – “The liquidity junkies on Wall Street have forgotten the role of the central bank,” Mr. Bernstein said. “Where exactly is the tightening of credit in the financial system? Where is the stress on bank balance sheets? The answer is, it’s nowhere to be seen.”
Jeff Currie, chief strategy Officer, Energy Pathways, Carlyle, Barron’s – “Copper is involved in all the key investment themes facing the world today. It embodies the demand around green spending, data centers and deglobalization.
Jim Lebenthal, chief equity strategist at Cerity Partners, Barron’s – “The Fed wants to go in September. The data support it, and the market is telling them to go,” said Mr. Lebenthal. The Fed has a chance to pull off a soft landing, and it doesn’t require heroic gestures.”
Andrew Brenner, of NatAlliance Securities, Yahoo Finance – “The script is clear–the Fed is going to ease in September, but no one is portraying a desire to ease 50 basis points at this time.
And…
Torsten Slok, Chief economist and Partner at Apollo Global Management, Barron’s – The U.S.economy is doing just fine.”