Weekly Recap & Market Forecast $SPX (Sept 15th—> Sept 20th)Hello Investors! 🌟 This week, US equity markets rebounded sharply as investors scooped up shares ahead of the September FOMC meeting. Let's break down the key events that shaped this rally-filled week in the markets. 📈
**Market Overview:**
Following last week's heavy selling, investors took advantage of lower prices to buy into the market ahead of the Fed's September policy decision. The US 10-year yield traded 5 basis points above the 2-year, continuing the yield curve's steepening and normalization. Tuesday's debate between former President Trump and VP Harris made headlines, though it is expected to have minimal impact on the upcoming election. Investor sentiment took a midweek hit after comments from major US banks at investor conferences raised concerns, while the Fed’s Barr introduced a watered-down proposal on Basel capital requirements for banks. Additionally, soft economic data from China fueled speculation about potential stimulus measures from the PBOC. Meanwhile, Brent crude prices dipped below $70/barrel for the first time since December 2021, with ongoing demand concerns largely emanating from China.
The US equity markets initially sold off after the release of August’s CPI report, which showed the owners-equivalent rent index accelerating for the second consecutive month, despite economists' and business leaders' belief that housing costs are moderating. The Yen strengthened further as BOJ officials continued to signal policy adjustments. Gold futures reached new highs, surpassing $2600 for the first time in non-inflation-adjusted terms. The ECB cut rates by 25 bps, though President Lagarde’s tone suggested the ECB may wait for further data and for the Fed to begin easing before cutting rates again.
Later in the week, stocks rallied on renewed interest in the AI trade, fueled by bullish comments from Nvidia and Oracle. Nvidia's CEO, Jensen Huang, confirmed that the Blackwell chip has entered full production and will ship in Q4. Oracle’s CEO, Larry Ellison, delivered strong results and optimistic long-term growth forecasts during their earnings call, sparking enthusiasm for the tech sector. Apple also launched its latest iPhones, integrating ChatGPT into its new ‘Apple Intelligence’ initiative.
In labor news, unions continued to flex their muscles, with Boeing's largest union rejecting a labor deal and announcing a strike that could slow production and impact the company’s recovery. AT&T's west coast operations and the NY Times tech guild also threatened strike action, while Amazon responded to unionization pressures by announcing a SEED_TVCODER77_ETHBTCDATA:2B investment in driver training and pay hikes.
By the end of the week, the S&P 500 climbed back above 5,600, trading at more than 20x next year’s expected earnings, an area that has been a point of resistance since the index's all-time highs in July. Former Fed officials and market watchers continued to push for a 50 bps rate cut, with futures markets shifting in that direction. For the week, the S&P gained 4%, the DJIA rose 2.6%, and the Nasdaq surged nearly 6%.
**Stock Market Performance:**
- 📈 S&P 500: Up by 4%
- 📈 Dow Jones: Up by 2.6%
- 📈 Nasdaq: Up by 6%
**Economic Indicators:**
- **US 10-Year Yield:** Traded 5 bps above the 2-year yield amid continued curve steepening.
- **August CPI Report:** Showed the owners-equivalent rent index accelerating, raising concerns despite expectations of housing cost moderation.
- **Brent Crude:** Dipped below $70/barrel for the first time since December 2021 due to demand concerns from China.
- **ECB Rate Cut:** The ECB cut rates by 25 bps, with a cautious outlook for further cuts.
- **Gold Prices:** Hit non-inflation-adjusted highs above $2600.
**Corporate News:**
- **Nvidia:** CEO Jensen Huang confirmed that Nvidia’s Blackwell chip is in full production and will ship in Q4, driving enthusiasm in the AI trade.
- **Oracle:** Delivered strong earnings and bullish long-term growth forecasts, with CEO Larry Ellison predicting robust growth through 2029.
- **Apple:** Launched its latest iPhone series, incorporating ChatGPT into its new ‘Apple Intelligence’ platform.
- **Boeing:** Faced setbacks after its largest union rejected a labor deal, announcing a strike that could jeopardize production and the company’s recovery.
- **Amazon:** Responded to unionization pressures by announcing a SEED_TVCODER77_ETHBTCDATA:2B investment in driver training and pay increases.
- **AT&T & NY Times Tech Guild:** Both faced potential strike actions, adding to labor-related pressures across industries.
**Looking Ahead:**
Next week will feature several key events:
- **Fed Policy Decision**
- **FOMC Dot-Plot**
- **Powell Press Conference**
- **U.S. Retail Sales**
- **U.S. Housing Data**
As we look forward, these developments will be crucial in shaping market sentiment and guiding investment decisions. If you have any questions or need further insights, feel free to reach out. Here’s to another week of informed investing and strategic decision-making! 🌟
