Author: Kerry Hilsabeck, CFP®
Title: Investment Adviser Representative
Tags: S&P 500, NASDAQ, CPI, Sentiment, Federal Reserve, Credit
Markets gained some momentum this week. Will there be another pullback or is it full steam ahead?
Monday S&P 500 1.16%| NASDAQ 1.16%
The equity markets were neck in neck to start trading for the week. Consumer Credit figures for July reinforced the trends that the consumer continues to spend. Figures came in double the amount forecasted with approximately $25.45 Billion in spending on credit which is the highest monthly figure since November of 2023. Spending helps the economy but weakens the consumer balance sheet as it increases in the lower income brackets. With rate cuts on the horizon, we will begin to see debt refinanced and could see spending patterns change moving forward.
Tuesday S&P 500 0.45%| NASDAQ 0.84%
Markets built off the momentum of the Monday rebound trade. Little to report for data, but tech stocks swung more into the positive on optimism in the AI space.
Wednesday S&P 500 1.07%| NASDAQ 2.17%
All eyes were on the release of CPI data, and it proved to be mixed. The Headline Consumer Price Index came in at expectations, but the Core reading (which excludes food and energy) ticked higher. The probability of a more substantial .50% rate cut waned on the news; however, the news was enough to send markets higher on the day. The MBA 30-year mortgage rate fell to its lowest level since February 2023.
Thursday S&P 500 0.75%| NASDAQ 1.00%
We saw another jump for the day as market participants began looking towards the Federal Reserve’s decision on interest rates next Wednesday. There was no significant data to deter the forward momentum for a 4th straight day of gains. Additional ground was made in tech companies (following last week’s sell-off) as chip manufacturers have seen a spike in demand.
Friday S&P 500 .54% | NASDAQ 0.65%
Friday’s trading capped off the week in the positive, again, with all losses essentially recovered from the first week of the month. Consumer sentiment rose and so did the broad markets throughout the week.
Conclusion S&P 500 4.02%| NASDAQ 5.95%
The broad equity markets have been vying for the top spot this week with the S&P 500 finishing behind the Nasdaq. It is important to note that the former is up 17.95% and the latter up 17.80% year-to-date. Growth companies (ie. Tech) have edged out Value companies over the course of this year but value has continued to put up a fight in this interest rate sensitive environment. The Cboe Volatility Index (VIX) fell into more comfortable territory as markets anticipate at least a .25% rate cut to affirm the broad consensus that policy can now be loosened. The notion of a .50% rate cut has been floated but is unlikely given the need for the Federal Reserve to gradually implement their rate cuts compared to being aggressive on their first rate cut. Expect markets to receive a rate-cut well while shifting their focus to the pace of job hires (or layoffs), manufacturing growth (or declines), and the housing/building industries response to a lower rate environment.
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