The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
After the dip.
Markets needed the weekend to settle down it seems. After the significant declines last week, markets repaired some of the damage today. Excepting Japan, overseas markets rallied and US equity futures climbed in the early premarket. The S&P 500 opened around +40 and gained from there. Headlines and data weren’t material and the fundamental landscape seems to be about the same as when we left it. What’s changed is the mood. Investors pondered the dip over the weekend and decided it was an opportunity instead of a warning. Tech and the Mag 7 led the way as equity investors went back to what’s worked. Treasury yields didn’t move much but they did drop a little, perhaps helping stocks as a result. The September 17th FOMC decision is now priced with 95% probability of a 25 bip cut. Total cuts for the year are now priced at 61 bips.
With the mood on the mend, we’re left wondering whether the market is just like it was before last week or whether there’s a wrinkle ahead. It doesn’t seem as though the big picture is radically changed from when the market was steadily climbing. For most of the year, markets expected 2-ish Fed cuts, late in the year. That view was thrown for a brief loop last week but now it’s consensus again. The economy continues to be viewed as healthy, although we’ve got a small injection of recession concern to deal with now….certainly nothing like March and April.
My general point is simply that we’re kind of in the same boat as we were in June and May and arguably all of last year.
The bull market continues, last week was just the latest bump in the road, the dip-buyer has come through as usual.
Why would/should we think that the future won’t be bullish?
Obviously *anything* is possible but the most likely continuation of things suggests that stocks are on still on the march and new all time highs are only a matter of time. To put a number on it, the S&P 500 needs to print 6428 to set a new high. That’s less than 2% away.
That’s not much of a challenge considering the overall mood of Wall Street.
See you tomorrow.
-Mike
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