MARKET COMMENTARY
Despite events on this week’s docket likely to shed light on Fed Policy, economic activity and the consumer, markets opened on a relatively uneventful Monday. No spikes in volatility or meaningful swings with stocks movement fairly balanced between gainers and losers.
It’s doubtful markets will keep that even-keeled tone as the week goes on, with headlines from several fronts capable of sparking either a fresh burst of optimism or pulling sellers back in if negative news stirs the bears. The biggest catalyst is Fed Chair Jerome Powell’s speech at Jackson Hole on Friday. Unlike many of his appearances so far this year, this event tends to deliver more fireworks as past chairs have used it as a podium to signal major policy shifts. Powell is expected to weigh in on the committee’s outlook for rate cuts following the recent jobs revisions and to roll out the Fed’s updated policy framework. How he frames the path forward in light of this fresh jobs data is sure to grab investors’ attention.
Beyond Friday, we’ll also get earnings from major retailers Walmart and Target, whose calls are typically watched for on the ground insight into the health of the American consumer. In addition, the S&P U.S. PMI readings arrive Thursday offering a snapshot of how each side of economic activity is holding up, particularly as the effects of tariffs continue to seep into the economy.
Newton Model Insights:
Our Newton Model readings suggest a broadly stable, though elevated equity market, with only modest shifts at the margins over the last week. The most notable move came from Mid Cap equities, which rose from 7 to 12 in the latest scoring. Beneath the surface, Large Cap Value continued to strengthen and remains the most favorable style. Notable gains in Healthcare (2 to 9) and Financials (5 to 11) provided support for Value’s leadership. In Fixed Income, momentum deteriorated across most sectors as yields moved higher. The lone exception was Floating Rate Bonds, which improved from 5 to 7. High Yield Bonds maintained the strongest relative score, while Short-Term Bonds saw a sharp decline from 11 to 6. Overall, this week’s readings point to a risk-on environment, though some caution embedded. Market breadth has improved, with previously weaker sectors showing resilience and more styles advancing than retreating in our framework.
Economic Releases This Week
Monday: Home Builder Confidence Index, Fed President Bowman Speaks
Tuesday: Housing Starts
Wednesday: FOMC Meeting Minutes, Fed Gov. Waller and Pres. Bostic Speak
Thursday: Initial jobless claims, S&P Services PMI, S&P Manufacturing PMI, Existing Home Sales
Friday: Fed Chair Powell Speaks at Jackson Hole
Stories to Start the Week
Americans are feeling their worst about the job market since the Great Recession
Israelis staged massive protests urging leadership to end its war in Gaza
Vegas is hitting a tourism slump, as visitor numbers fell 11% YoY in June
Trump says meeting with Putin in Alaska “productive,” but provided no specifics
Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques on the current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score.
Trend & level both matter. For example, a name that moves from an 18 to a 16 would signal a strong level yet slight exhaustion in the trend.
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.