Today’s Stock Market Update
The week of the 11th to 16th was another rocky one, yet it ended well. It’s a major event, because investors are looking for reasons to be optimistic.
Volatility shows they’re being irrational, overly impacted by daily reports, that are quickly forgotten.
The FED overshoot this spring and summer, if it is an overshoot, was holding everything back while threatening even higher rates. And the specter of higher rates, lower consumer demand, and high unemployment still exists. And Democrat hopefully K Harris is warning of higher taxes and price controls. That doesn’t bode well for capitalist markets.
Investors were feeling good this week, and that momentum might continue next week, unless someone generates a negative event to kill the enthusiasm. On Monday, the U.S. leading economic indicators will be released, expected to be down .4%, existing home sales, consumer confidence index on Tuesday, then new home sales is released on Thursday. However, analysts are fully aware of the slowdown in both the economy and housing markets.
However, it seems we’re shifting from from an inflation risk to a growth risk this fall. How investors feel about that is a day to day thing. Tom Lee of Fundstrat this week spoke of the continued volatility, but feels confident that by year end the indexes will be well up and ready for a great 2025? What do you think he’s really basing that outlook on?
Are P/E Ratios Meaningful at All, if Investors are Buying for the Future?
Buying for the future, means the real currrent value isn’t all that relevant. Many feel AI stocks such as AMD and Nvidia are bargains, and will rocket once the economy is revived.
We have to keep in mind that stocks are grossly overpriced (except for AMD who got right-priced recently vs Nvidia) so almost all investment is speculative. The economy won’t just spark up overnight. The media is pushing the “inflation is dead” narrative, but anyone who’s seen their insurance rates go up, food prices of late, and the price of fuel knows inflation and high prices aren’t gone. In fact, consumers are cutting, become more pessimistic, and wages are falling. Credit card debt and bankruptcies are climbing. A rate cut won’t help them.
This week’s jobs and inflation report wasn’t too negative and that seemingly insignificant report rocketed the indexes. It seems investors really buy into the narratives used in the media. There’s a deliberate push about it, with nary a few of a potential recession. The issue of Federal government spending is the driver of inflation, yet the media won’t touch the topic.
Of course, this whole mess was caused by government, both in the excess spending it still does, and in keeping rates too high, too long.
Hovever, we’re not out of the woods, despite all the expectations (demands) to see a 50 point September FED rate cut. The FEDs Goolsbie seems to think a cut is unwise. The fact is, prices are still really high, with few big corporations willing to help out.
IBD reported that Dow Jones futures fell slightly Sunday night, along with S&P 500 futures and Nasdaq futures. They believe the late week rally isn’t over, that it’s not just a bounce, will accelerate this week. They may be expecting good news on inflation, and other data to be released this week.
Some experts, including Goldman Sachs believe the market still hasn’t seen its bottom. CNN business believes strong fear is driving the market of late.
Weakness in economic data is popping the balloon of optimism in the market and we should remember that stock valuations are at their all time highs and primarily based on a coming FED easing. But, are they going to be able to reduce the rates. Inflation might rise again. In fact, inflation is still raging on food, gasoline, auto insurance and more.
Tom Lee of Fundstrat believes last week was just a growth scare and that the worst is behind us. However, a lot of investors are still looking closer at the matter of a near term recession, as unemployment rises, GDP slides, and earnings wane. You may have seen Jeremy Seigel of Wharton says the FED needs a big cut in September. That would certainly be an event for the S&P, NASDAQ, Dow Jones and Russell indexes.
Last week, NASDAQ jumped more than 5% while the S&P rose more than 4%.
The week has ended with Dow Jones declining 1500 points in the last two days while the Russell 2000 fell 10% or 2000 points over the last 2 trading days. Nvidia, the tech and safety investors favorite play fell 20% over the last 2 days.
It is a challenge to understand and describe the current mess the current US government has created. This coming 3 month period might be even more volatile as institutional investors try to cover themselves and retail investors try to understand what’s happening. That $6 trillion sitting in money markets likely won’t be shifting to equities anytime soon.
Immediate Forecast: It’s risk off for investors as the meter suggests and the hunt for safety is on during the next 3 months.
Today’s poor jobs report sends additional signals that the economy is slowing and won’t be revived quickly. Has the dam burst? It does set the stage for deeper corrections ahead as investors await the FED decision in September. The debate continues. Some experts are thinking the economic narrative so pushed via Bidenomics and the Dems has changed. A path to recession is possible.
Nonfarm payrolls increased by 114K jobs during July, way off economists expected gains of 180k and well down from June’s 179K growth. The unemployment rate increased .2% to 4.3% vs. the 4.1% experts predicted. When you combine the poor market outlook with the war potential in the Middle East, including higher oil prices, and you can see why investors are turning very gloomy. Today’s pullback will provide plenty for the media to speculate regarding a potential stock market crash.
The latest ISM manufacturing report added to reccent pessimism. June’s index fell .2% to 48.5% last month, below expectation of 49.1%. Yet, production and demand for the immediate future aren’t part of investor’s calculus. They’re firmly fixed on next year and the next 5 years. It’s the 3 to 5 year frame that smart investors are researching more because some stocks will grow tremendously (depending on the Nov 8 election).
“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions.” ISM survey chief Timothy Fiore.
And with the bad news, is the realization that the US economy isn’t overheating which puts the FED and J Powell in a difficult position. They’ve state that employment and inflation are the two key factors which means rate cutting should begin. But hold on, rate cutting can affect funding of other parts of the government operations. A high spending government with low tax revenues needs high rates to attract buyer to US treasuries and bonds. Bond yields have plummeted the last two days.
It seems some investors are one step ahead and pursuing the large industrials on the Dow Jones. It wasn’t a good day for energy stocks as major oil companies took one on the chin. The price of oil fell 2.3% to $76.44 a barrel on Friday. Energy will likely lag until the US economy gets into gear next year.
What is This About the Trump Trade?
Investors will be listening more keenly now to President Trump and his plan to bring the economy back to health and support the stock market.
If the “Trump trade” is a real thing, and expert forecasters including Tom Lee of Fundstrat believe it is, then the Dow and Russell will go much further. The Russell is still 1,000 points below its all-time high in 2021. Small caps and small business in general have been plagued with high interest rates, inflation and high taxes. Tom Lee believes the Russell 2000 will be up 40% by end of summer, which is about 7 weeks away (September 20th).
If it is all about inflation and a likely return to Pro-USA FED economic policies, then US stocks are looking really promising. Today’s reports of lower inflation and yesterday’s great US GDP report gave the markets a good lift.
The best stocks of late include pharmaceuticals and health stocks as you see below. Aveanna Healthcare is on a tear as is Longboard pharmaceuticals. Keep your eye on their latest growth. This chart below is ranked by real performance in the last 30 days.
This week’s inflation report showed the June PCE was 1.0%, 2.5% year over year, and Core PCE was 2.6% YoY. It seems inflation is easing and experts are certain of a September rate cut. Combine that with a Trump and Republican win in Senate and House, and you can see why big and small investors were happy on Friday.
Inflation Easing Steadily?
Truflation’s Inflation index shows a progressive downward trend which should excite most investors, that it’s under control and the Fed should pivot on rates perhaps even by September. That’s not far for stock market investors. That will buoy the 5 year and long term forecasts. See more on the weekly, 3 month and 6 months projections. If it’s all about inflation, then investors should be moving their money out of money markets and bank accounts now to get in on what could be a once in a lifetime burst in value.
Best Performing Sectors Today
The best performing sectors were communication services, industrials, financials, materials and real estate.
TESLA Real Time
Google Stock Real Time
Amazon Stock Real Time
Stock Market News
There’s a number of investing sites and data sources which help you get quotes on today’s prices and more on the current status of the S&P 500, Dow Jones, and NASDAQ. See more on Facebook stock, Google stock and Tesla stock.
Top Stocks Overall Today
Find more insight into what’s going on in the stock market this week, be sure to check out the stock market predictions post. There you’ll find the key issues driving the market right now and what will influence it this week, 3 months from now and next year. Yahoo Finance has a broad array of stock market information including real time tickers and economic news.
More on Stock Market Forecasts:
What is Trump Trade? | Stock Market This Week | Stock Price Quote | Best S&P Sectors | Stock Market Forecast | Market Rally | Stock Trading Platforms | Stock Trading | Low Mortgage Rates Today | Best Dow Jones Stocks | Best Stocks to Buy | Stock Market Next Week Quarter 6 Month | Stock Market Predictions | Stock Market News | S&P 500 Forecast | Dow Jones Forecast | Will Stock Market Crash?