Next Week’s Market Forecast

As the week ends, my previous prediction of a market correction this fall did come true, but a little early.

All the negative factors were easy to see, it’s just that the market is much too optimistic, buoyed by media speculation of a FED rate reduction. The volatility simply reflects how much investors are being manipulated. When this hype can’t overcome real negative data, you see the market fall to where it should be.

Some analysts still believe this market hasn’t seen its bottom. Everyone just has to hang on for 3 more months.

The FED’s trajectory is unfolding as predicted, but not as hope for, for some forecasters who though inflation would simply collapse. Inflation is at 3% and may not fall. So big FED rate cuts shouldn’t happen. If the FED does cut in September, it is going back on its word. A Seeking Alpha report states the FED’s Susan Collins “expects rates to decrease over the next few years” but chose not to specify the timing of rate of the easing. In other words, easing right now makes no sense. They’re focused on the unemployment rate which isn’t rocketing.

Warren Buffet seems to be leaning on a near term recession.

His investment firm Berkshire Hathaway, has purchased a massive reserve of $234.6 billion in short-term Treasury bills actually exceeding the amount held by the Federal Reserve. That amount is up $40 billion from what it held last December. He sold his stocks and bought recession proof treasury bills. Obviously, he thinks the FED rate will stay high. That has to worry and disappoint a lot of investors.

Liz Young of Sofi speaks with the CNBC panel about the week ahead. She’s shows how sensitive the market is to data, in this week’s case of good labor market news.

Next week of the 12th to the 16th, earnings reports are due from Home Depot, KB Financial, Sun Life, Cisco, Cardinal Health, Walmart, Applied Materials, Deere & Company, Ross Stores, JD.com.

The monthly Federal budget will be reported on Monday, July Producer Price Index on Tuesday, and July Consumer price index (forecast to drop .1% YoY). On Thursday, the Business inventories report will be announced, while on Friday, the consumer sentiment index is reported.

This week, we’re seeing more large scale layoffs, against a weekly slowing of jobs claims. Cisco and Paramount Global are among the latest reporting this week. Last month’s jobs report showed the unemployment rate is up to 4.3% from 3.8% last July jumping by 352,000 to 7.2 million. The number of people on temporary layoff increased by 249,000 to 1.1 million in July. Those temp layoffs will likely be extended.

Why would anyone buy and sell against a weekly jobs report? They’re as volatile as the Dow Jones, S&P, NASDAQ and Russell themselves. The Russell 2000 specifically, is on a roller coaster. Investors are in a quandary about the rotation into small caps. Those who made the move early are sitting uneasy. And tech stocks, including the AI stocks are sitting on lows waiting for consumer spending to continue.

If Donald Trump can win this election, and the Republicans win both the House and Senate, it’s 3 green lights for the US economy, which will create inflation. So investors shouldn’t sit around waiting for a lower FED rate. The housing market likely will get rolling by end of 2025 as rates fall, but the FED will likely be a pain, certainly this fall.

In 2025, Trump could reduce government spending which would deflate inflation and increase unemployment — a key priority for the FED.

Next week should be a flat week as the DEM coronation of Kamala Harris subsides, and investors come back to reality. There is no short term catalyst for big market gains. It’s all artificially generated hype.

The source of volatility is politics and investors/media perceptions that the FED will be influenced by political pressures. But that manipulation would cause a catastrophic loss of confidence in the integrity of the FED. That would damage all markets. If interest rates drop, it will stimulate the economy and cause producers to jump up their prices quick.

What can calm the inflation and market irritation is reduced US government spending and transfers to states and cities. That will result in significant pullback in spending, and give the FED its desired inflation damper.

They’ve never solved the core issues of corporate greed, monopolies, and damaging regulations that hamper supply side support.

This week’s US trade deficit report showed a slight decrease, however the 3 month moving average is accelerating. The deficit sits at $75 Billion for June alone. By the fall, it could be up to a $1 trillion per year level. That feeds strongly into the US debt deficit, reduced tax revenue problem and a $1+ trillion interest payment. At some point, it’s going to hit the fan. The Democrats have just about reached their credit card limit.

President Trump wants to reduce that number which could be a big boost for US companies and the 2025 stock market forecast. So, it’s about more than just manufacturing repatriation. The US needs some protection to get its own businesses rolling.

And next week’s reports covers a number of economic signals that may not be appetizing for investors. Those reports include the US trade deficit, jobless claims, small business confidence index, two manufacturing survey reports, consumer sentiment and housing starts.

Let’s check back in on Monday for the live stock market today post.

That’s going to make a lot of investors want to get out of the stock market, because a slouching economy will produce lower earnings. Predictions of a big rate cut could send the markets down even further next week. FED chair hinted at a rate cut in September on Wednesday, but now the FED will have measure their next move and their FED speak carefully. Their between a rock and a hard place.

Once investors dwell on that this weekend and next week, we may see a further selloff.

Investors dumped their holdings in consumer discretionaries, financials, and energy and moved their money to real estate, consumer staples, and utilities — in a search for safety ahead of a possible recession.

Key Industry Sectors last week. Screenshot courtesy of CNBC.

We’ve all been waiting for this inevitable sell off or correction, and investors are likely frightened. It’s a safe bet they’re looking for advice and guidance, yet self-directed investors might not knowledgeable advice available. They know analysts and economists apparently didn’t see this coming, which begs the question “are the experts” viable as stock market forecasters?

Here in this graphic from Google Trends, we see a big resurgence of searches for “stock market crash.” That crash talk had been quelled for many months but now investors are reawakening to

Search trend for stock market crash. Screenshot courtesy of Google Trends.

Investor Sentiment Survey

Below is AAII.org’s recent survey. Today’s investor survey might look very different. I’m not sure how relevant the investor sentiment survey is. Too often, it’s media manipulated and not reflecting the opportunity that’s actually being offered.

Investors apparently feel more bearish and gloomy than last fall! And it appears they were wise!

60% of respondents expect a rate cut in September. The FED’s J Powell has been talking about the harm of continued high rates to the US economy and the FED governors are likely ready to drop it 25 basis points (IMHO).

However, here is AAII.org’s latest survey:

aai investor sentiment survey. Screenshot courtesy of aaii.com

See more on the 3 month, 6 month, and 5 year stock market outlooks, and the current stock market forecast.

Market Futures from Investing.com

Focus on the Dow: Investing.com’s future quotes sees the Dow Jones well up in September, but strangely Russell stocks up minimally. Since interest rates won’t fall soon, it makes sense that overhyping small caps might come with disappointments, frustration and more pullbacks can volatility.

Here was Investing.com’s future report last week, and below is where it is Friday night.

Investing.com's Futures Markets Quotes. — Investing.com’s Futures Markets Quotes. Screenshot courtesy of Investing.com

Major Economic Announcements Last Week

Tuesday, July 30

Consumer Confidence Survey (July)
Job Openings (June)

Wednesday, July 31

ADP employment (July)
Chicago Business Barometer (July)
Pending home sales
FOMC interest rate decision and Chair Powell press conference

Thursday Aug 1

Initial Jobless Claims (July)
US Productivity (Q2)
ISM manufacturing (July)
Construction spending (June)

Friday Aug 2

US employment Report (July)
US unemploy rate (July)
US hourly wages (July)
US factory orders (June)

Earnings Reports This Week

Monday Aug 05: Palantir Technologies, Tyson Foods, CSX Corporation, AECOM, Fidelity National, Lucid Group,

Tuesday Aug 06: Amgen Inc, Caterpillar, Mitsubishi UFJ Financial, Uber, Airbnb, Duke Energy, Marathon Petroleum, Suncorp Energy, SupeMicro Computer, Yum Brands.

Wednesday Aug 07: Nov Nordis, McKesson Corp., Shopify, CVS Health, Emerson Electric Co., Hilton Worldwide, Monster Beverage, Equinix, Rockwell Automation, Global Payments.

Thursday Aug 08: Eli Lilly Company, Gilead Sciences, Brookfield Corp, Chenier Energy, Datadog, Restaurant Brands, Expedia.

Friday Aug 09: Evergy Inc., Legend Biotech, New Fortress Energy, Construction Partners, Vinfast Auto, Getty Images, Algonquin Power.

Stocks to Watch Next: Same as Last Week

Best Stocks to Watch this week. Screenshot courtesy of Barchart.com

Next week’s events from TradingView

Weekly forecast hunters are pursuing clues about the direction of the Dow Jones, S&P, and NASDAQ for specific stocks or ETF’s worth buying or those they should dump. I’d like to hear from you about which stocks you think are the most likely stocks that will jump next week and over the next 6 months.

The NASDAQ, S&P, Russell, and Dow Jones are all looking positive right now, and the stock market forecast is looking much brighter as the FED pulls back on its injury of the US economy.

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* Note: This post on next week’s stock prices is for informational and entertainment purposes and should not be regarded as investment advice for any market transactions. Please consult with your stocks and financial advisor for investment decisions.