We kicked off the week with a rebound in stocks, fueled by dip-buying after last week’s sell-off.
Market Commentary
We kicked off the week with a rebound in stocks, fueled by dip-buying after last week’s sell-off. The most beaten-down sector, megacap technology, led the way in outperforming.
The S&P 500 dropped 4% last week, marking its worst performance since March 2023, driven by renewed concerns over an economic slowdown. The market was rattled by signs of a weakening labor market, as nonfarm payrolls grew by 142,000, missing the expected gain of 161,000. The rally to start this week appears to be more technical, driven by dip-buying rather than any fundamental shift in market sentiment.
All eyes are now on Wednesday’s inflation report, which is expected to show a year-over-year increase of 2.6%, down from last month’s 2.9%. This report will provide more insight into how the Fed might respond in next week’s meeting, where there is currently a 71% probability of a 25 basis point rate cut.
Our Newton models have favored a risk-off stance recently, with fixed income showing relative strength compared to equities. Megacap names, particularly in Technology and Communications, have been a drag on those sectors, while defensives like Utilities and Consumer Staples are leading.
Economic Releases This Week
Monday: Wholesale Inventories, Consumer Credit
Tuesday: NFIB Optimism Index
Wednesday: Consumer Price Index
Thursday: Initial Jobless Claims, Producer Price Index, Monthly US Federal Budget
Friday: Import Price Index
Stories to Start the Week
Boeing and the Machinists union, which represents 33,000 of its employees on the West Coast, have reached a deal that avoids a strike.
Apple is getting ready to announce the iPhone 16.
The opposition candidate in Venezuela’s recent presidential election has arrived in Spain after fleeing his homeland.
Official NFL Team Valuations 2024.
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.