Weekly Commentary for the week ending September 13th. 2024

Market Recap for the week ending September 13th. 2024: 

 

A Week of Recovery and AI Momentum

This week, U.S. equities rebounded sharply, with big tech stocks leading the charge, driven by renewed enthusiasm around artificial intelligence (AI) and a recovery from oversold conditions. The S&P 500, which had experienced its worst weekly performance since March 2023, and the Nasdaq, which had not seen a decline of this magnitude since January 2022, both managed to close the week higher.

Nvidia (NVDA) was a standout performer, surging 15.8% on the back of bullish commentary at the Goldman Sachs Cornucopia Conference. Amazon (AMZN) and Microsoft (MSFT) also posted impressive gains, up 8.8% and 7.2%, respectively, reflecting the growing optimism around AI's transformative potential. However, not all tech giants benefited equally; Apple (AAPL) lagged behind with a modest gain of 0.7%.

The broader market also showed strength, with sectors such as semiconductors (+9.9%), IT services, software (Oracle +14.3%), homebuilders, asset managers, machinery, railways, airlines (Alaska Air Group +10.8%), precious metals miners, and cruise lines all outperforming. However, there were also sectors that struggled, including energy, money center banks, cosmetics, protein, household products, and media.

 

Treasury yields mostly firmed, with the yield curve steepening, while the dollar index remained largely unchanged despite significant developments in the FX market, such as the European Central Bank's rate cut and the Bank of Japan's comments on normalization. Meanwhile, gold reached a new record high, up 3.4%, and crude oil and copper also saw gains, rising 1.2% and 4.2%, respectively.

 

WealthTrust Long Term Growth Portfolio Weekly Top 10

 

Key Drivers and Events

The primary driver for the week's positive market momentum was the rebound in stocks following oversold conditions from the prior week, which had marked the biggest pullback in the S&P 500 since the SVB crisis. This was compounded by encouraging headlines on the secular growth of AI, with Nvidia and Microsoft at the forefront, bolstered by optimistic discussions at the Goldman Sachs Cornucopia Conference. Oracle also contributed to the AI theme, gaining 14.3% after well-received earnings results.

The ongoing debate around the Federal Reserve's next rate move also played a role in market sentiment. Although slightly higher inflation data seemed to support the case for a 25 basis point rate cut, there remains some speculation over a potential 50 basis point reduction, fueled by a few reports in the financial press and comments from former NY Fed President Bill Dudley advocating a larger cut.

 

The August Consumer Price Index (CPI) report provided further context for the Fed's decision-making. While the headline CPI was largely in line with expectations, core inflation was slightly hotter, driven by shelter prices and a rebound in airline fares. However, the broader disinflationary trend remains intact, and much of the market's focus has shifted towards labor market conditions and growth prospects.

Other economic data, such as the NY Fed Survey of Consumer Expectations, showed stable inflation expectations, while jobless claims remained steady. Consumer sentiment continued to improve, with September's preliminary reading reaching its highest level since May, driven by falling year-ahead inflation expectations.

 

Political Developments and Corporate Highlights

On the corporate front, several notable earnings and guidance updates shaped market movements this week. Oracle's 14.3% surge was attributed to strong revenue, margins, and free cash flow growth. In contrast, Adobe (ADBE) fell 4.7% following disappointing fiscal Q4 guidance. Financials had mixed results, with JPMorgan (JPM) down 3.8% and Wells Fargo (WFC) up 7.2%. Meanwhile, GameStop (GME) dropped 13.7% after reporting lower-than-expected Q2 sales.

Additional corporate news included Apple's minor gain of 0.7% despite losing a legal battle over a $14 billion Irish tax bill, and Tesla's (TSLA) 9.3% increase following a strong month of sales in China. Upcoming changes to the S&P 500 index were also announced, with Dell (DELL), Palantir (PLTR), and Erie Insurance (ERIE) set to join the index later this month.

 

Looking Ahead

Next week's market focus will likely center around several key macroeconomic events, including the September Empire State Index, August retail sales, industrial production figures, and the much-anticipated FOMC meeting on Wednesday. Notable earnings reports from General Mills (GIS), Darden Restaurants (DRI), and FedEx (FDX) will also provide further insight into the health of the consumer and broader economic conditions.

 

Sector Performance Overview

The best-performing sectors this week included Technology (+7.33%), Consumer Discretionary (+6.14%), and Communication Services (+4.26%). In contrast, Energy (+0.74%), Financials (+0.49%), and Consumer Staples (+1.11%) were the week's underperformers.

 

This week’s market dynamics underscore the importance of staying nimble and informed, particularly in an environment characterized by evolving macroeconomic conditions and emerging technological trends. As always, our focus remains on identifying opportunities that align with our long-term investment strategy while managing risk effectively.

 

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