Vikki Zhao
PUBLISHED August 19, 2024, 5:00 PM EST. 6 min read
Market sentiment is shifting, leading to increased volatility during a typically slower period, but the overall uptrend for the S&P 500 remains intact. Despite some volatility and a brief dip below support levels, if these supports hold and resistance levels aren’t too challenging, the S&P 500 could potentially revisit previous highs.
However, in the short term, we anticipate continued elevated volatility as the market transitions, with the focus shifting from inflation and interest rates to macroeconomic data. The combination of a slower seasonal calendar and the upcoming election could keep uncertainty and volatility heightened, leading to potential back-and-forth trading and sharp rate-of-change fluctuations, like the recent rebound following the August 6th sell-off.
AimStar analyst believe the environment might offer opportunities to accumulate during periods of weakness.
The next key focus is on resistance levels, particularly the S&P 500’s current approach to the 50-day moving average. If the index can break through this resistance, the chances of further gains increase, potentially pushing toward resistance around 5550 and setting the stage for new highs.
A quick reversal at resistance or another dip below support could threaten the ongoing uptrend. We expect initial support around 5324, with further support at the 38.2% Fibonacci retracement level of 5071.
Recently, investors have adopted a more cautious approach, with defensive sectors performing better and the Discretionary vs. Staples ratio breaking its uptrend. This defensive bias may continue in the near term due to seasonality and volatility, so patience and selectivity are advised.
In the long term, providing the macroeconomic environment does not deteriorate further, the market could be in a favorable position. With the Fed likely to cut rates, inflation trending downward, a stable job market, and resilient overall macroeconomic conditions, AimStar analyst believes earnings growth will support a positive outlook for equities.
*This article’s viewpoints are attributed by Olena Li.
Hudson’s Bay Co. Faces Store Closures Amidst Neiman Marcus Acquisition Plans
Reported on July 11 by AIMSTAR.CA – Hudson’s Bay Co. announced its intention to acquire Neiman Marcus Group LLC, aiming to become a leader in luxury goods. However, Canadian shoppers are more concerned about ongoing maintenance issues, with several Bay stores temporarily closed for repairs. Recent closures in Vancouver, Victoria, Winnipeg, and Windsor have sparked concerns about the company’s financial health and general upkeep. Analysts suggest that the closures indicate financial stress and could lead to store shutdowns. The acquisition aims to create a separate Canadian entity to enhance growth and liquidity, but its impact on resolving current store issues remains uncertain.
Sellers Return to Canadian Housing Market, Increasing Inventories and Buyer Bargaining Power
Reported on July 9 by AIMSTAR.CA – Sellers are flooding back into Canada’s housing market, boosting inventories in major cities and giving buyers more leverage. The Bank of Canada’s recent interest rate cut has encouraged some buyers, but not enough to offset the rising inventory, according to RBC economist Rachel Battaglia. New listings are outpacing sales, particularly in expensive markets like Toronto, where active listings surged 68% year-over-year in June. Despite a slight sales increase, Toronto’s home prices fell 4.6%. Similar trends are seen in Vancouver and Montreal, with rising inventories and subdued price growth. Battaglia suggests more significant interest rate cuts are needed to reignite market activity.
Mining Sector Drives Deal Surge on Bay Street
Reported on July 8 by AIMSTAR.CA – Higher commodity prices and the rise of electric vehicles have boosted the mining sector, making it the focus for Bay Street dealmakers in the first half of the year. Investors showed strong interest in companies supplying copper, with the sector involved in over half of equity and equity-linked deals. This surge led to 508 debt and equity deals worth $338.7 billion, a significant increase from the previous year. Major deals included First Quantum Minerals’ comprehensive refinancing and Capstone Copper’s equity offering. The mining boom, particularly in copper and battery-related metals, is expected to continue, driven by global trends in artificial intelligence and energy storage.
Tesla Falls Further as Reported Robotaxi Delay Weighs on EV Maker
Reported on July 12 by AIMSTAR.CA – Tesla (TSLA) shares are slipping more than 1% in premarket trading after suffering the steepest losses of any S&P 500 constituent Thursday with an 8.4% plunge on a report the EV maker is postponing its robotaxi unveiling by two months. The company previously indicated it would hold an event to introduce the autonomous vehicles on Aug. 8, but Bloomberg reported the presentation has been pushed back to October. Tesla shares entered Thursday on an 11-session winning streak to move into the green for the year, fueled by its better-than-expected second quarter deliveries report, but returned into negative territory for 2024 on yesterday’s plunge.
U.S. Inflation Cools, Possible Fed Rate Cut in September
Reported on July 11 by AIMSTAR.CA – U.S. inflation slowed in June, mainly due to reduced housing costs, raising the possibility of a Federal Reserve rate cut in September. Core CPI, excluding food and energy, increased by just 0.1% from May and 3.3% year-over-year, marking the slowest rise in over three years. Overall CPI fell 0.1% from the previous month. The labor market showed mixed signals, with high jobless benefit applications but a drop in first-time filings. Traders anticipate a rate cut in September, and Fed Chair Jerome Powell emphasized that decisions will be data-driven.
July 15 – July 19 COMING UP
- Federal Reserve Chairman Jerome Powell speaks on Monday, with other Fed officials making remarks throughout the week.
- Goldman Sachs, Bank of America, and Morgan Stanley are among the major bank earnings coming this week.
- Netflix and Johnson & Johnson also report earnings this week, while Amazon hosts its annual Prime Day sales event.
- The Republican National Convention will feature remarks from presidential candidate Donald Trump.
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