Gonet: Market news of August 17th

Dow +0.71%, S&P 500 +0.19%, Nasdaq -0.19%, Russell 2000 -0.04%, SOX -1.03%, Eurostoxx +0.41%, SMI -0.37% .

For a bull, there is probably nothing quite like a quietly rising market in an atmosphere of widespread skepticism. Well, that’s pretty much what’s been happening on Wall Street for exactly two months. And yes, dear bears, the S&P500 Index (SPX) has been on the rise since June 17th, giving it an 18.3% rise over the period, it is now well over halfway through its decline seen in the January started, caught up again and , icing on the cake, yesterday it’s very close to its 200-day moving average, the session high is 4325.28 points versus a 200-day moving average of 4326.17, in basketball we call it Money time, it’s no longer fun in the huts, the bears are on the ropes, the score is near.

But what happens in the happy realm of action?

Well, not much at the moment, the big August siesta is underway, many speakers are absent, busy on vacation. Taking a step back, we find that the market is changing the subject. Their main concern has long been inflation. Moreover, Bank of America’s most recent survey of fund managers in the United States shows that the latter remain concerned about this, and they are probably not wrong. However, since last Wednesday, the day of the release of the consumer price index in the United States, which relaxed everyone, the much-anticipated market seems to have moved on to the next topic. And the market is now focused on growth and the big question: “recession or not recession?”. Until recently, investors of all persuasions were looking for evidence of a sick economy, ready to kneel. And then, without warning, the tide turns, the stock market holds up, hope for a whiff of optimism creeps into the minds of those involved, we gradually begin to see the bright side of things on the trading floors, and that’s it well, some key economic stats show sentiment by well beating expectations (notably the ISM services index or the employment report). The positive mechanism works, the stock market does the rest, think of the “wealth effect” that has been warming the hearts of investors every day for the past two months.

What’s happening in stock indices right now is likely the result of a cocktail of FOMO (fear of missing out), growing risk appetite, still-high skepticism from the community, weak positioning by institutional investors, a mountain of cash available to retail investors, and more A technical configuration improving at a rapid pace, particularly on the SPX, and domestic market indicators sending increasingly encouraging signals.

Of course, tomorrow is a different day and the bears will inevitably be smiling again sooner or later. Meanwhile, there is less and less talk of a “bear market rally” in the media…

The Fed remains indispensable to anyone looking to the future. I suggest everyone to log out of Elon Musk’s Twitter account with the upcoming back-to-school season and focus on economic statistics, especially American ones. Jerome Powell has made it very clear in his recent speeches that the Fed is “data dependent” and wants to see the numbers to determine policy progression. In this context, July industrial production, which was announced yesterday and clearly beat expectations, sees a good growth point, a potential reason for the Federal Reserve to remain aggressive in its rate hike cycle, but the market is not blinking, preferring to think that the soft landing, the soft landing of economic growth is possible. Similarly, Walmart and Home Depot released quite reassuring quarterly results yesterday. Oh, both companies better not disappoint after their recent profit warnings. In particular, if we take a closer look at Walmart’s numbers, we note that the company says it has canceled billions of dollars in orders to cope with the uncertainties ahead, but anyway, the market is sending it 5% higher, relieved that the American consumer is apparently still alive, the one who contributes almost 70% to the country’s growth.

We return to Wall Street with SPX, whose podium for the day unsurprisingly consists of consumer staples, consumer discretionary and financials. The 200-day moving average is playing its resistance role, we’ll see if it tests it again today, volatility is dropping slightly, the VIX closes below 20, trading volume is weak but I repeat, the moves are very real, the small transport companies (Robinhooder) are out and are particularly looking for stocks like GameStop, Blue Apron or Bed Bath and Beyond. The technology sector is the subject of profit-taking, particularly the giants of the rating, while the energy is decidedly lacking momentum, the barrel of WTI Light Crude is about to let go, developing at $87.43 this morning. On the other hand, natural gas keeps rising, winter is coming eventually…

On the bond market side, the mood is hardly improving, on the contrary. The US 2-10 year bond spread continues to widen to -45 points, an alarming message this asset class is sending to the market. The 10-year US bonds are currently yielding 2.83%. The dollar remains in demand, it moves at 1.0163 against the euro, its uptrend is confirmed, it was challenged 3 to 4 days ago. Gold, which no longer seems to respect any of its statuses (notably safe haven, hedge against inflation) is flirting with its 50-day moving average, which stands at $1778 an ounce.

The Kiwi jumped along with New Zealand bond yields after the RBNZ (Central Bank of New Zealand) hiked interest rates by 50 basis points (as expected) to 3% and said it was appropriate to continue tightening. The bank now estimates that the nominal interest rate will peak at 4.1% in the second quarter of 2023.

Germany’s natural gas reserves may be filling up faster than usual, but even if stocks hit the 95% target by November, they would only meet about two-and-a-half months of Russia’s heating, industrial and power needs if Russia shut down supplies completely, according to the Bundesnetzagentur.

Does anyone else laugh on this planet? Elon Musk announces he “doesn’t buy sports teams,” adding that his previous tweet about taking over the Manchester United football team was a long-running joke on Twitter. After all, he already wrote that he wanted to offer Coca-Cola to “put cocaine in it.” We also remember his announcement that Tesla was going bankrupt and of course the fanatic got bogged down in the Twitter affair like an adult all by himself. Elon Musk becomes the caricature of the perfect illustration that money is a very bad master.

Joe Biden signs the $437 billion tax, climate and health care bill, signaling a big victory for Democrats ahead of November’s midterm elections. Bloomberg agency publishes an article recounting how even before Joe Biden’s victory in the White House, a group of influencers, including Bill Gates, had been quietly lobbying Joe Manchin and other senators in hopes of a rare victory over climate.

US retail sales for July will be released at 2:30 p.m. In the evening (8 p.m.) time for the minutes of the last Fed meeting.

Sonova: AlphaValue switches from purchase to accumulation with a price target reduced from CHF 417 to CHF 411. Credit Suisse remains outperforming with a price target reduced from CHF 380 to CHF 335. Straumann: JP Morgan remains overweight with a price target reduced from 204 to 153 francs. Swiss Life: The financial group made a profit of CHF 642 million in the first half of the year, slightly better than expected. The management does not formulate any number forecasts. Implenia was awarded the contract for the north main section of the second tube of the Gotthard road tunnel. BAE Systems wins contract to supply infrared seeker technology for Lockheed Martin missiles.

Tonight and this morning, indices in Asia are trading uptrend with the exception of Seoul which is returning 0.67%. Tokyo rose 1.23% at the bell, Hong Kong 0.58% and Shanghai 0.45%. SPX futures fell 4 points and Europe opened 0.2%.

#Gonet #Market #news #August #17th

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