Short On Time… Executive Summary
Deal or no deal. That is the question. Oil is like a Duncan yo-yo being twirled around by Tom Smothers. I feel like these Iran peace deals are like Lucy holding the football for Charlie Brown. In this scenario Trump is Charlie and Iran Lucy. As of today, we are seeing a rally based on another potential deal. Frankly, I will believe we have an agreement after it has been in place and adhered to for about 6 months. As Charlie would say, “Good Grief!”
Well, no rate hike last week as we indicated. There’s no way they can hike and have oil drop 20% and inflation along with it. Talk about egg on your face. So, the Fed will monitor the data just along with the rest of us. Now, stocks can get back to what is important for the time being, earnings. Earnings for the most part are coming in pretty good as 88% of those reporting have beaten expectations. Are we out of the woods? Unfortunately, the whole Iran issue is going to take time to resolve and the transportation inflation it causes could hamper growth if it continues. We will just have to wait. That’s the hardest part in investing. I have a quote on my desk in plain sight that reads “The money isn’t made in the buying or the selling; it is made in the waiting.” Patience. We all want it now, but it just doesn’t work that way. We will gladly take today’s action in the markets though. Stocks are up, interest rates are down a little and all is well. Let’s hope Lucy does something out of character and keeps that ball planted.
The Week On Wall Street
Stocks pushed through another volatile summer week as diverging Q2 corporate reports and the Fed's rate decision whipsawed prices. The Standard & Poor’s 500 Index rose 1.05 percent, while the Nasdaq Composite Index advanced 1.59 percent. The Dow Jones Industrial Average added 1.04 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 2.13 percent.
Tech Stocks Steal Spotlight
Chip stocks were under pressure at the start of the week as investors fretted over fresh competition from China and higher-than-expected AI capital expenditures. But the Dow pushed higher as oil prices slid and investors rotated out of technology. On Wednesday, the Federal Reserve said it was holding interest rates steady, a move that was initially well received by markets. But as the day progressed, selling picked up as investors expressed concern that the Fed was not doing enough to battle inflation. Markets rebounded on Thursday with semiconductors and big-tech names leading the way. The Nasdaq rose nearly 3 percent, ending its 6-day losing streak. Momentum from Thursday’s rally extended into Friday. Markets rose at open despite diverging Q2 earnings results from two influential tech companies. While it wasn’t a straight line, all three major averages built on gains throughout the day to end the week higher.
Fed Watch
The Federal Open Market Committee voted 9-3 to hold rates steady: 9 voted to hold, while 3 voted to increase. The decision to hold rates was initially met with enthusiasm, but traders became increasingly unsettled as the day progressed. At the Fed’s press conference, Chair Kevin Warsh explained the decision, but some were concerned that the Fed was underestimating inflation. The next scheduled two-day Fed meeting ends on September 16, so traders will have plenty of economic reports to assess overall consumer prices.
This Week: Key Economic Data
Monday: Purchasing Managers Index (PMI)—Manufacturing. Construction Spending.
Tuesday: Trade. Job Openings & Labor Turnover. Factory Orders.
Wednesday: ADP Employment Report. PMI–Services.
Thursday: Productivity & Costs. Weekly Jobless Claims. Wholesale Trade.
Friday: U.S. Employment Report. Consumer Credit.
This Week: Companies Reporting Earnings
Stay tuned...
