Vikki Zhao
PUBLISHED September 9, 2024, 5:00 PM EST. 6 min read
The S&P 500 has recently seen a strong rally from early August lows but is now facing resistance at previous highs and testing support around its 50-day moving average. Despite some volatility, underlying market strength, such as robust advancing volume and the ratio of advancers to decliners, suggests that the August lows are likely to hold.
However, market fluctuations may persist as stocks absorb the volatility experienced since July. Historically, this period tends to be weaker, with the last five Septembers averaging a 4.23% decline, and upcoming election-related volatility could also pressure the market. Nonetheless, AimStar analyst believes the overall trend for equities remains positive, and any market weakness as a potential buying opportunity.
While the S&P 500 has appeared relatively stable in recent weeks, there have been notable shifts in market leadership. Since the release of June’s CPI report on July 11, inflation concerns have eased, and bond yields have declined. This has allowed the equal-weighted S&P 500 to reach new highs, even as the semiconductor sector, previously a leader, has fallen 19% from its peak.
The semiconductors failed to break above their 50-day moving average and now seem poised to retest their August lows. In contrast, other sectors, such as interest-sensitive stocks, defensive plays, and cyclical areas like financials and industrials, have performed well. Although tech fundamentals remain strong, the sector seems to be in a period of consolidation following prior gains.
Economic data will be more prominent in the coming weeks, ahead of the Federal Reserve’s September 18 rate decision. Fed Chair Powell confirmed a likely rate cut during his speech at Jackson Hole, which has led to lower bond yields. The 10-year yield has remained steady since his remarks, with markets expecting at least a 0.25% rate cut, and a 45% chance of a 0.50% cut. The exact pace of cuts will depend on economic data, particularly employment figures.
Friday’s jobs report will play a key role in determining the size of the initial cut. Markets are currently pricing in about 1% in cuts by the end of the year, which may be an optimistic expectation if the labor market stays strong. AimStar views the likely reduction in rates as a positive factor for equities over the next year, with rate movements continuing to impact overall market performance.
*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.
Earnings releases for the week of September 9, 2024, span a diverse range of industries, including game retail, software, cloud computing, sports, home furnishings, jewelry, sporting goods, cybersecurity, and agriculture:
Monday, September 9: Game retailer GameStop (#GME) is set to release its earnings, with the market focusing on its performance within the retail gaming sector.
Tuesday, September 10: Software giant Adobe (#ADBE) and cloud computing leader Oracle (#ORCL) will report their quarterly results.
Wednesday, September 11: Manchester United (#MANU), the globally recognized sports club, and home goods retailer Big Lots (#BIG) will release their earnings.
Thursday, September 12: High-end furniture retailer RH (#RH) and jewelry chain Signet Jewelers (#SIG) are scheduled to report their financial results.
Friday, September 13: Academy Sports + Outdoors (#ASO), cybersecurity firm Rubrik (#RBRK), and agricultural company Limoneira (#LMNR) will release their earnings.
AimStar Capital Group Inc. is a Canadian full-service Investment Dealer, regulated by Canadian Investment Regulatory Organization (CIRO) and a member of Canadian Investor Protection Fund (CIPF). As an independent firm, AimStar is built on a foundation of innovation, integrity, and client-centricity. They are committed to providing unbiased advice and dedicated to the client’s needs, helping them achieve their financial goals.
AimStar is recognized as a Wealth Professionals 5-star Wealth Management Firm for 2024, this award recognized AimStar has offered exceptional client experience, a proven investment track record, continuous innovation, and stringent regulatory compliance.