September daydreams
- Stocks near highs as Fed confirms September rate cut
- Tough week for energy stocks as oil continues to churn
- This week: GDP, durable goods, Fed inflation, Nvidia earnings
What’s 0.6% between friends?
That’s how far below its record high the S&P 500 (SPX) closed on Friday—just three weeks after it hit a three-month low on August 5.
After a volatile Thursday, it looked like the market could pivot to its fifth down week of the past six, but a Friday rebound amid encouraging words from Fed Chairman Jerome Powell helped the SPX wrap up a second-straight up week:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
The headline: Market looks ahead to September rate cuts.
The fine print: Last Wednesday’s FOMC minutes made clear the Fed intended to cut rates in September. Two days later, Fed Chair Jerome Powell didn’t do anything to upset those expectations in his Jackson Hole Economic Symposium speech, noting “The time has come for policy to adjust.”1
The number: 739,000, the number of new home sales in July—the highest total since May 2023.
The scorecard: The Russell 2000 (RUT) small cap index led the US market last week:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector returns: The strongest S&P 500 sectors last week were real estate (+3.7%), materials (+2.4%), and consumer discretionary (+2.2%). The weakest sectors were energy (-0.4%), information technology (+1%), and communication services (+1.3%).
Stock movers: AST SpaceMobile (ASTS) +24% to $38.60 on Monday, Procept BioRobotics (PRCT) +28% to $83.44 on Wednesday. On the downside, Liquidia (LQDA) -31% to $9.79 on Monday, Advance Auto Parts (AAP) -17% to $51.10 on Thursday.
Futures: Last Wednesday, October WTI crude oil (CLV4) closed at its lowest level ($71.94) since early February, then rebounded to end the week down less than $1 at $74.92. Gold hit a new all-time high last Tuesday, and December gold (GCZ4) ended the week just off that level at $2,546.40. Week’s biggest gains: December cocoa (CCZ4) +10.2%, October Midwest steel (HDGV4) +10.1%. Week’s biggest declines: December spring wheat (MWZ4) -6%, December wheat (ZWZ4) -4.4%.
Coming this week
In addition to the latest read from the Fed’s preferred inflation gauge (PCE Price Index), traders will get a look at durable goods orders, home prices, and the first revision of Q2 GDP:
●Monday: Durable Goods Orders
●Tuesday: S&P Case-Shiller Home Price Index, FHFA House Price Index, Consumer Confidence
●Thursday: Q2 GDP (second estimate), Trade Balance in Goods (advance), Retail and Wholesale Inventories (advance), Pending Home Sales
●Friday: PCE Price Index, Chicago PMI, Consumer Sentiment
The earning calendar is still heavy on retail names, but Nvidia (NVDA) headlines what will likely be a closely watched contingent of tech stocks:
●Monday: Heico (HEI), Trip.com (TCOM)
●Tuesday: American Woodmark (AMWD), Ambarella (AMBA), Box (BOX), Nordstrom (JWN), PVH (PVH), SentinelOne (S), Semtech (SMTC)
●Wednesday: Abercrombie & Fitch (ANF), Bath & Body Works (BBWI), Foot Locker (FL), Kohl's (KSS), J.M. Smucker (SJM), Affirm (AFRM), Salesforce (CRM), CrowdStrike (CRWD), Five Below (FIVE), HP (HPQ), NetApp (NTAP), Nvidia (NVDA), Abercrombie & Fitch (ANF)
●Thursday: Best Buy (BBY), Burlington Stores (BURL), Campbell Soup (CPB), Dollar General (DG), J. Jill (JILL), Ollie’s Bargain Outlet (OLLI), Ubiquiti (UI), Autodesk (ADSK), Dell (DELL), Gap (GPS)
●Friday: Frontline (FRO)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
Rally facing a test?
As of Friday, the SPX was 8.6% above its August 5 close—its biggest 14-day gain since November 2023, and one of its 10 biggest of the past five years. The fact that such a high-momentum rally has coincided with the index approaching the implied resistance of last month’s record highs may have some traders wondering whether bulls were poised to take at least a breather.
There’s some evidence of this possibility, at least on a short-term basis. After 83 other rallies like this one since 1957, the SPX was more likely to close lower the next day, although it was higher after five trading days 53% of the time. For context, though, the SPX closed higher in 56.5% of all five-day periods. And the fact that its average five-day return after the high-momentum rallies was -0.3% shows the market did, occasionally, pull back in the near term.
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1 FederalReserve.gov. Jerome Powell’s “Review and Outlook” speech at Jackson Hole economic symposium. 8/23/24.
2 A figures reflect S&P 500 (SPX) daily closing prices, 1957-2024. Supporting document available upon request.