Stocks finished the week higher across the board thanks to a tech-led rally on Wall Street, with stocks bouncing when and where they should mid-month into Labor Day weekend. A +4% rise in tech and energy also powered the S&P 500 to a +2.5% rise on the week, while consumer staples and utilities, laggards’ year to date, lost more ground in that index.
U.S. equities closed August on a strong note. Value stocks were temporarily boosted by rising long-end yields, but Growth stocks reasserted their dominance toward the end of the month on softer labor market data. Technology stocks fell -1.32% for the month, their first decline since December 2022, though the Nasdaq 100’s 42% gain YTD represents 2,400 bps of outperformance over the S&P 500. Megacap technology stocks continue to lead THE MARKETS WITH Nvidia hitting another new all-time high, reaching $1.2 trillion in market value. All the back of its recent weight loss drug success, drugmaker Novo Nordisk eclipsed LVMH as Europe’s largest stock.
Oil prices rallied past $85/bbl. This is a fresh 10-month high. Despite many calls of “peak oil”, and many Western governments push for clean energy, global fossil fuel demand outpaces supply. This is led by the continued expansion by China, India, and many others use of cheaper, abundant, and proven fossil fuels including the likes of coal. Gold continues its resilience in the face of higher real interest rates. The last time 10-year real rates were above 1%, the price of gold was roughly -40% lower once again proving that Gold is NOT an inflation hedge, but more importantly a currency depreciation hedge. Go check out a chart of Gold in Japanese Yen terms to see what Gold is likely to do in dollar terms over the upcoming 2 decades.
On the ETF front, over the last week, with China slowly stimulating growth, the FXI +4.7%, and KWEB +7.8% ETFs gained versus SPX +2.5%, NDX +3.7%, and RTY +3.6%. Commodity ETFs led the way higher with the XLE +3.6%, OIH +5.6%, XME +5.5%, and XLB +3.7%. Recall China is ~50% of global demand for base metals.
Major earnings scheduled for this week include ZScalar (ZS), DocuSign (DOCU), Oracle (ORCL).
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