The market might experience significant turbulence during the final two weeks of August.
Editor Thenews24.net
2 min read
On Tuesday, stock markets opened with little movement, but there’s significant activity beneath the surface. Despite the typically low trading volume in the last two weeks of August, market interest remains high due to an unusual rally. The S&P 500 is on the verge of achieving a nine-day winning streak, a feat last seen in November 2004, nearly two decades ago. Currently, the S&P 500 is just 1.1% shy of its record closing high of 5,667 set on July 16. The rally, which started from the market’s low on August 5, has expanded significantly.
Indicators of this broad market strength include the S&P 500 Equal Weight ETF (RSP) reaching an all-time high and the New York Stock Exchange advance/decline line also hitting a historic peak. All 11 sectors of the S&P 500 have risen since the August 5 low, with nearly half reaching or approaching new highs. Here’s a breakdown of sector performance since August 5:
– Technology: up 13.1%
– Consumer discretionary: up 8.7%
– Financials: up 7.5% (new high, economically sensitive)
– Communication services: up 6.8%
– Industrials: up 5.7% (near new high, economically sensitive)
– Health care: up 4.7% (new high, consumer/defensive)
– Energy: up 4.6%
– Consumer staples: up 3.6% (new high, consumer/defensive)
– Real estate: up 3.6% (new high, interest rate sensitive)
– Utilities: up 3.4% (new high, interest rate sensitive/AI play)
– Materials: up 3.4%
This broad rally is characterized by strong performance across various sectors, including growth sectors like technology, economically sensitive sectors such as financials and industrials, and interest rate-sensitive sectors like real estate and utilities. Consumer/defensive sectors, including consumer staples and health care, are also leading, both reaching new highs.
Several factors contribute to this broadening rally. The soft landing scenario remains plausible, with economic data indicating slowing but robust job growth. The Federal Reserve is anticipated to start cutting rates soon, and earnings have been stable, with projected growth of 10% for S&P 500 earnings in 2024 and 15% in 2025, showing little change in recent months. Additionally, the early August volatility led to the unwinding of many crowded trades, including parts of the yen carry trade, potentially reducing market volatility.