In his Daily Market Notes report to investors, Louis Navellier wrote:
Stocks build on the month-end rally as yields continue to fall modestly.
Markets continue to rally on the sentiments of forecasts of the Fed’s intentions of making further rate increases. After Powell spoke last Friday, another increase was forecast at 56% and today has fallen to 41%. The market is a bit bipolar; shifting from good economic news is good for earnings, to weak economic data is good for lower inflation/ Fed being done increasing.
Tail Wagging Dog
Lower interest rates can be interpreted as greater recession concerns, but at the same time make buying bonds and sitting on the sidelines in cash less attractive. At this point, the S&P is only down 87 points in August, up from being down 218 on August 18th, up 17.8% YTD. The NASDAQ is down 376 points, up from down 1,055 on the 18th, now up 34.5% YTD. Tech is still the tail wagging the dog, as seen in the equal rated S&P which is up only 6.4% YTD.
The economic numbers that swung the markets this morning were a revision of 2Q23 GDP that was lower than expected, along with a lower revision of the 2Q23 Price Index. We also saw pending home sales rise instead of the forecast to fall. Crude oil inventories fell more than expected, lifting crude over $81.50, up $3 in a week. Gold is up $10 on the day, to $1,975, up $60 in 10 days.
The lower interest rates have also resulted in the US Dollar Index falling back to 103, down 1.2 in two days, the lowest in 2 weeks, and looked upon as another reason that might help the Fed decide to pause. As the day winds on, the market has whipsawed from gains to losses back to gains, as it digests the big runup since Friday.
Importantly, NVIDIA Corp (NASDAQ:NVDA) continues to rise, now at a new all-time high of $497 (+247% YTD), which has revalidated the AI narrative, for now, after having brought doubts for the first couple of days after its stellar 2Q23 report.
Coffee Beans: I Scream for Ice Cream.
Tech repair firm iFixit best known for smartphone fixes is calling for a change in US copyright law that would allow McDonald’s ice cream machines to be fixed more easily. According to McBroken, a website dedicated to tracking the status of McDonald’s ice cream machines, about 13% are currently broken. Source: Sky News. See the full story here.