Wall Street is poised to pause in the first trading session of the new week after a strong rebound from its August 5th market collapse. While the market has been on a roll, with the Nasdaq 100 and S&P 500 Index enjoying a seven-session rally, the lack of any major trading catalysts makes it difficult to determine the direction of the market.
One potential factor influencing the market is the four-day Democratic National Convention kicking off on Monday. News and events stemming from the convention could sway investor sentiment. Fund manager Louis Navellier points out the significance of the upcoming September 10th presidential debate, noting that consumer confidence is likely to rise as candidates make promises.
The week ending August 16th saw strong gains driven by positive economic news, including benign inflation reports, a surprising decline in jobless claims, and a robust retail sales report. This momentum carried into Tuesday, following the release of the July producer price inflation data. While the Wednesday session saw some tempered buoyancy, the July consumer price inflation report continued to indicate easing price pressures. A strong retail sales report, positive weekly jobless claims data, and positive commentary from Walmart further boosted the rally on Thursday. The week concluded with continued gains, leaving the tech-heavy Nasdaq Composite and S&P 500 Index on a seven-session winning streak. The Dow Jones Industrial Average also rose for a fourth consecutive session, reaching its highest closing level in nearly three weeks.
Carson Group Chief Market Strategist Ryan Detrick highlights the possibility of significant gains in the latter half of the year. He observes that the S&P 500 hasn’t had an eight-session winning streak since November 2023. If the index advances on Monday, it could signal further gains. Detrick points out that in the past four years, when the S&P 500 experienced an eight-session winning streak, it ended the year with gains of close to 20% or more.
The coming week will see the Jackson Hole symposium, a key event where central bank chiefs, policymakers, and economists will gather. Fed Chair Jerome Powell is scheduled to speak at the event on Friday, while other Fed officials will also participate. Among the economic reports to watch are the new and existing home sales figures for July, S&P Global’s flash manufacturing and service sector purchasing managers’ indices for August, weekly jobless claims, and the minutes of the Fed’s July monetary policy committee meeting.
In the pre-market trading, chip stocks have weakened, with Micron Technology falling due to negative commentary from Citigroup. Nvidia and Advanced Micro Devices also saw declines. Estée Lauder Companies and Palo Alto Networks are among the companies set to release their quarterly earnings.
Commodity markets saw crude oil futures dip below the $75-a-barrel mark, while gold futures rose slightly, staying above the $2,500 level. The yield on the 10-year Treasury note dropped 2.3 points to 3.869%. Bitcoin fell nearly 2% in the past 24 hours, trading around the $58.5K level. Asian markets exhibited mixed sentiment, with the Japanese Nikkei 225 sliding despite a strong advance on Friday. The yen strengthened due to a report showing a strong rebound in core machinery orders, weighing down the export-heavy Nikkei index. The New Zealand and South Korean markets also fell, while the Indian market experienced modest losses. However, most other major markets in the region closed in the green. European stocks opened modestly higher, with the Euro STOXX 50 Index adding about 0.26%.
