Market Commentary
Stocks ground higher to start the week coming off a 50 basis point cut from the Fed last week. Overseas, a large stimulus package from China helped those names surge.
China’s move was entirely risk-on in response to the new stimulus measures. European stock indices also traded higher, buoyed by gains in sectors closely tied to the Chinese economy. China’s comprehensive stimulus package, unveiled on Tuesday, included a cut in reserve requirements for banks and at least 800 billion yuan ($114 billion) in liquidity support for the stock market. As a result, Chinese stocks saw their strongest performance since July 2020.
For the S&P 500, we are back towards the critical technical juncture near 5,700. We recently hit new highs after the Fed meeting and breadth remains strong. Watching how this rotation beneath the surface plays out will be interesting.
Our Newton models are continuing to show more on the margin improvement across major indexes. The biggest jump has been in emerging markets. Fixed-income areas have weakened recently as rates have gone slightly higher. Within sectors, it is notable that the defensive sector has weakened quickly recently while Cyclicals are leading the group.
Economic Releases This Week
Monday: Atlanta Fed President Bostic Speaks, S&P Flash US Services & Manufacturing PMI, Chicago Fed President Goolsbee Speaks, Minneapolis Fed President Kashkari Speaks
Tuesday: S&P Case-Shiller Home Price Index, Consumer Confidence
Wednesday: New Home Sales, Federal Reserve Governor Kugler Speaks
Thursday: Initial Jobless Claims, Pending Home Sales
Friday: Personal Spending, PCE Index
Stories to Start the Week
A potential hurricane, which would be named Helene, is churning in the Caribbean and is forecast to make landfall in Florida on Thursday.
Apollo Global Management has offered to make a multibillion-dollar investment in Intel Corp.
Sunken superyacht is believed to contain watertight safes with sensitive intelligence data.
The Justice Department sued Visa on Tuesday, accusing the company of illegally monopolizing the debit card market.
What is Newton?
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.