Newsletter

This was a decently boring week that ended just about where it began. The S&P 500 closed Friday at 7,718.60, up a rounding-error 0.1% for the week; however, that flat headline hid a decently bumpy five sessions. Stocks dipped early as oil spiked on fresh Middle East hostilities, recovered midweek when Fed Governor Chris Waller struck a dovish note, and yields eased, then handed it all back Friday when the August jobs report landed hot.

If you look at the market headline, the bulls won this week. However, the internals told a different story with the S&P 500 closing Friday at 7,711.76, up 0.5% on the week, while the Nasdaq Composite added 0.9% to 26,402.42.

The week belonged to the bond market. Long-dated Treasury yields spiked to levels not seen in decades, with the 30-year touching a 19-year high above 5.30% mid-week and the 10-year closing Friday at 4.738%, near a 20-month high. Those seem to be really scary numbers, but as discussed on Friday, this is just a return to normalcy after 15 years of abnormally low rates.

This past week, stocks pushed to a fresh record, then gave a little back on Friday as inflation came in softer-than-expected. Both CPI and PPI prints cooled the case for a September rate hike, and Friday's weak retail sales report and a softer read on consumer sentiment nudged the index down about 0.2% into the close.

The week the labor market cracked was the week stocks had their best run since April. Friday’s close of 7,757.64 on the S&P 500 set a record, up 3.6% over five sessions. The Nasdaq Composite gained 5.2% to 26,690.62, and the Dow added roughly 3% to 54,036.93.

The S&P 500 closed the week at 7,489.72, up 1.1%; however, that headline hides nearly everything that mattered.

The S&P 500 finished the week at 7,411.98, down about 0.6%, as an AI capex scare and an oil shock collided into its second straight weekly decline and the first back-to-back down weeks since March. The headline number hides what actually happened. Underneath a falling index, the average stock held up just fine.

The headline number this week was boring, but the action underneath was not, as the momentum meltdown was tearing through the market's most crowded trade. The S&P 500 slipped about 1.5% to close at 7,457.69, the Nasdaq 100 gave back roughly 4%, and the Dow held up with a fractional loss.

The tape flipped its script this week. As we noted two weeks ago, we rotated back to the mega-cap growth stocks. Since then, the mega-cap complex grabbed the wheel again and dragged the index within a whisker of a new record. The S&P 500 rose 1.38% to close Friday at 7,575. That leaves it less than 1% below the June 2 all-time high of roughly 7,612. The Nasdaq Composite added about 1.8%, and the winners were exactly the names you would guess.