Weekly Recap & Market Forecast $SPX (Sept 8th—> Sept 13th)

9 de set.

Hello Investors! 🌟 September started with a sharp decline as investors pruned risk assets from their portfolios amid concerns over US economic data and rising worries about growth. Let’s break down the key events that influenced the markets this week. 📉

Market Overview:

The week opened with a broad sell-off across equities, commodities, and crypto, as US Treasury yields dropped to their lowest levels in more than a year. Disappointing August ISM manufacturing data set the tone for a week of worse-than-expected economic readings, stoking fears that the elusive “soft landing” may be slipping further away. US equities gave back all the gains made in the second half of August, with much of the selling attributed to multiple compression, particularly in technology stocks. Nvidia was the most prominent example, with its stock falling ~25% from its earnings peak amid historic daily declines in market cap. The S&P 500 faced resistance near the 5,600 level, struggling above 20x next year’s earnings. By the end of the week, the S&P lost 4.2%, the Dow dropped 2.9%, and the Nasdaq tumbled 5.8%, marking the tech index’s worst decline since November 2022.

Stock Market Performance:

📉 S&P 500: Down by 4.2%

📉 Dow Jones: Down by 2.9%

📉 NASDAQ: Down by 5.8%

Economic Indicators:

WTI Crude Oil: Prices slid to their lowest levels since June 2023, prompting OPEC+ to extend its 2.2M bpd voluntary production cuts through November.

Bank of Canada: Cut rates by 25 basis points in a move to boost economic growth, while PM Trudeau faced political challenges after losing support from a key coalition partner.

JOLTS Jobs Data: Missed estimates significantly, falling below 8M job openings for just the second time this year. The ratio of job openings to unemployed workers dropped below a key Fed gauge, reinforcing the case for rate cuts.

ADP Employment Report: Hit a three-year low, showing declining pay growth for those who didn’t change jobs, adding to concerns about labor market weakness.

Fed’s Beige Book: Revealed flat or declining economic activity in nine out of twelve districts, suggesting economic sluggishness that could influence the Fed’s next moves.

August Jobs Report: Showed further labor market deceleration, with downward revisions to June and July payrolls. The report kept the door open for more aggressive Fed action, with FOMC officials signaling that at least 50 basis points will be debated at the September 18th meeting.

Treasury and FX Markets:

Yield Curve: Continued to normalize as the US 2-year yield traded 4 basis points below the 10-year rate.

Futures Markets: Priced in over 100 bps of cuts by the end of 2024 and ~225 bps by September 2025.

Dollar/Yen Exchange Rate: Traded close to its August lows, while the VIX volatility index rose above 23 but remained below early August highs.

Corporate News:

Docusign: Posted strong quarterly results and guidance, getting back on track after struggles during the post-pandemic period.

Hewlett Packard Enterprises: Delivered respectable earnings but saw shares fall, as investors were unimpressed with guidance.

Broadcom: Reported an uninspiring Q3, leaving investors with more questions about the pace of AI growth, contributing to broader tech sector pressure.

Nvidia: There was speculation that NVDA had received a subpoena from the DOJ, but this turned out to be false news. While they are under investigation, no formal subpoena has been served yet.

M&A News:

Nippon Steel’s Acquisition of US Steel: Faces challenges as reports suggest the Biden Administration may block the deal on national security grounds.

Verizon: Agreed to acquire Frontier Communications for 9.6B, expanding its fiber network and positioning itself for future growth.