THE GIST (“THE WHAT”)
Posting a two-and-a-half week high, the S&P 500 index extended its recent gains, rallying sharply after weaker-than-expected economic releases bolstered the odds for the Fed to pause its rake hike campaign. All sectors traded higher, with mega-cap technology stocks leading the broader index higher as yields fell across the board.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
Trading Plans for TUE. 08/29 – Cautiously Bullish
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THE DETAILS (The “How & Why”):
As investors look for signs that the Fed is done with raising interest rates, weaker-than-expected economic news increased the odds of a rate pause. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) fell for the third straight month in July, falling to a near two-and-a-half year low and coming in at 8.827 million as against the expectations of 9.5 million, signaling easing labor market pressures.
The Conference Board U.S. Aug consumer confidence index also fell 7.9 to 106.1, coming in weaker than expectations of 116.0. Yields were knocked lower with the 10-year treasury yield easing to 4.11%, sparking a sharp rally in chip stocks.
Tesla soared 7.69% to lead the gainers in today’s session following reports that the EV maker is planning to launch a $300 million AI computing cluster by employing Nvidia’s GPUs. Nvidia also hit an all-time high, jumping 4.2% after announcing its partnership with Alphabet that will involve its technology to be sold through Google’s cloud. Apple and Alphabet but closed more than 2% higher.
While lack of hawkish surprises from Fed Chair Powell has helped lift the risk-on sentiment in the market this week, investors will turn their attention on the upcoming economic data releases for further clarity on labor conditions and how long the Fed could keep interest rates elevated.