Last week, the S&P 500 reached a historic all-time high, driven by the Federal Reserve’s unexpected decision to cut interest rates. The Fed announced a 50 basis points (BPS) rate reduction, citing a positive trend in inflation data and a resilient labor market. This “jumbo” rate cut has raised questions among investors and analysts alike. While the Fed emphasized the decreasing inflation as justification, critics argue that it might be a proactive attempt to stave off rising unemployment and prevent a potential recession. Throughout this week, various Federal Reserve members will be speaking to provide additional insights into the rationale behind this significant rate cut and their individual perspectives on the future direction of U.S. economic policy. Economic Data to...
Weekly Stock Market Update & SPY Analysis The most anticipated week of the year is here, with all eyes on the Federal Reserve’s interest rate decision at the upcoming FOMC meeting. Although the Fed has held several meetings this year, this one holds particular significance—it’s expected to be the first where they finally reduce interest rates. The key question is whether the cut will be by 25 or 50 basis points. Back in March 2022, the Fed initiated its rate hike cycle to combat soaring inflation, which had surged to 8.5%, far exceeding the healthy 2% target. Inflation later peaked at 9.1%, according to the U.S. Bureau of Labor Statistics. To address this, the Fed implemented aggressive rate hikes not...
Weekly Stock Market Update & SPY Analysis The strength of last month’s recovery rally came into question as September kicked off, following renewed fears of an economic slowdown. Megatech stocks tumbled, causing the S&P 500 to post its worst week since March 2023. The uncertainty around U.S. economic health has shifted away from company earnings and more toward the labor market. Elevated interest rates and tight monetary policy have impacted hiring and employment, pushing the U.S. unemployment rate to 4.2%, according to Friday’s report. Although it ticked down from last month’s 4.3%, the significant slowdown in hiring has unnerved investors. Fortunately, the Fed is set to reduce the central interest rate later this month, but the question now is whether...
Weekly Stock Market Update & SPY Technical Analysis This week, all eyes will be on labor market data, particularly Friday's U.S. unemployment report. Last month’s surprising spike in jobless claims rattled markets, sparking a wave of selling and raising concerns about a potential slowdown in consumer spending. The U.S. unemployment rate is expected to ease slightly from 4.3% to 4.2%, which could help calm fears of an impending recession. Beyond the labor market, investors will also focus on the U.S. trade deficit report to assess trends in exports and imports. The trade deficit narrowed last month, driven by increases in exports of civilian aircraft, automotive vehicles, and energy commodities. Imports rose by 0.6% to $339 billion, leaving the trade gap...
Stocks rocked back and forth on Friday after Powell finished his long awaited speech at the Economic Symposium. He started out his speech by stating that the “time has come” for policy change. He celebrated the progress that the central bank has made over the past three years, announcing the defeat on inflation. Powell’s tone seemed upbeat, more positive than meeting in recent history. His comments, combined with The FOMC Minutes released earlier last week, were reassuring that an interest rate cut is coming in September. Small caps reacted positively to the update, with the Russell 2000 (IWM) soaring 3% to end the day. Large tech stocks didn’t see as much of a reaction however, likely because markets are anxiously...
