Weekend Update, September 3rd, 2024
Index, Sector & Asset Performance
While many investors expected the week’s performance to be solely dependent on NVDA’s earnings report, it wasn’t. Post-EPS, NVDA fell -6%, yet in a sign of market strength. The S&P 500 managed to end on the week up +.3% posting its seventh positive month out of eight this year. Per J.C. Parets, breadth has been better since the second quarter of the year and with monthly closing charts of equally weighted Technology, equally weighted financials, equally weighted healthcare and equally weighted Industrials all hitting all-time closing highs. DJIA ended last week at a record high. The Dow Jones Index rose +0.9%, the S&P 500 +0.2%, and the NASDAQ Composite was flat held back by NVIDIA’s results.
NVIDIA, the second most valuable company in the world, beat EPS expectations, but a conservative outlook and production issues with their new Blackwell chip sent the stock down –7.73% in total last week. S&P 500 EPS growth beat estimates in Q2, but full-year 2024 expectations remained.
This morning futures are opening weaker with S&P 500 futures (SPX) -0.6%, Nasdaq 100 futures (US100:IND) -0.8% and Dow futures (INDU) -0.6%.
The question of how much the Federal Reserve will cut rates at the September 18 FOMC meeting dominates markets. Upbeat data pushed the 10-year yield up +10 bps last week. The yield curve inversion as measured by the 2-year to 10-year spread has continued to narrow, and the spread ended the week at only –2 bps. This widely watched warning sign of possible recession has been inverted since July 2022.
This morning the 10-year Treasury yield is unchanged at 3.92%. The 2-year yield rose 1 basis point to 3.94%.
Economic Indicators and Earnings Commentary
As a warning to becoming too optimistic, 3rd quarter economic data normally “surprises” to the upside into October as expectations have been reset lower throughout the 2nd quarter. This showed itself last week, as data was positive with the 2nd quarter GDP revised higher to +3.0% q/q with household consumption now stronger. Economic momentum continued into July, where personal income rose 0.3% m/m and real personal spending rose +0.4% m/m, also more than expected. Consumer confidence rose to 103.3 in July, the highest point in six months. Initial jobless claims were little changed at 231,000 for the week ending August 24 (so little changed for most of 2024 that they too look “faked”).
In the US, the second half of week brings a slew of economic data for those looking at the minutia out of DC. ISM manufacturing index is released today, the JOLTS job openings report released on Wednesday, and the employment report hits the take on Friday. Federal Reserve members New York Fed President Williams and Fed Governor Waller will deliver speeches on Friday.
Global Market Trends/Commodities/Currencies
Global equities gained +0.3% last week led by Japan outperforming in general, equity markets are making new highs.
Financials led sectors higher last week globally. Technology stocks brought up the rear largely on the back of weaker semiconductor stocks.
Oil prices fell last week as OPEC+ confirmed they will allow supply increases to proceed as planned in October. This sent oil prices toward $72 a barrel, a level that has held a lower bound since July 4th weekend. Retail gas prices ended the Labr Day weekend near $3.35/gallon, the lowest since the end of the 1st quarter. Gold prices hit new highs on the back of foreign buying and central bank monetary easing.
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