U.S Stocks Rebound After Sell-off, Yields Hit New 52-week Lows

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Sep 13, major U.S. indexes post solid gains and largely recovered from the previous week’s steep losses, which saw the S&P 500 Index(SPX) suffer its worst weekly decline since March 2023. Growth stocks outpaced value shares by a wide margin, helped by strong performance from technology stocks. NVIDIA was a particularly strong contributor after the chip giant offered a positive outlook on artificial intelligence at an investment conference. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1.   Inflation. Core inflation slightly higher than expected. On Wednesday, stocks initially headed sharply lower following news that core (less food and energy) consumer inflation rose to 0.3% in August, a tick higher than consensus expectations. Meanwhile, headline inflation showed an annual increase of 2.5%, well below July’s increase of 2.9% and its lowest level since early 2021. In any case, it appeared the news from NVIDIA seemed to help drive a turnaround later Wednesday morning. 

2.    Interest rate. Treasury yields ticked lower during the week with the yield on the benchmark 10-year Treasury note trading at year-to-date lows. 

3.    Fed rate cut. The futures market is evenly divided on whether the Federal Open Market Committee (FOMC) will cut rates by 25 basis points (0.25%) or a more-aggressive 50 basis points (0.5%) when it concludes its policy meeting next Wednesday. 

SPX sectors in play

All but one of the 11 SPX sectors closed with gains for the week. Growth stocks including Tech(XLK) and Consumer Discretionary(XLY) sectors outpaced value shares including Consumer Staplers (XLP) and Financials(XLF) by a wide margin, helped by strong performance from technology stocks. NVIDIA was a particularly strong contributor after the chip giant offered a positive outlook on artificial intelligence at an investment conference. Energy(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow(DJI) and SPX bounced back to near its peak while Nasdaq Composite(COMP) is about 5% away to its peak. All three indexes are currently trading above their 20/50 and 200dma, which is a bullish trend. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

China/HK

China stocks declined as weak inflation data spurred concerns about a downward price-wage spiral weighing on the economy. Both the Shanghai Composite Index(SSE) and the blue chip CSI 300 fell 2.23%. In Hong Kong, the benchmark Hang Seng Index gave up 0.43%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    China’s consumer price index rose 0.6% in August from a year earlier, up from 0.5% in July, but below economists’ forecasts. Core inflation, which strips out volatile food and energy costs, increased 0.3%, slowing from July’s 0.4% rise, and marked the lowest level in over three years. The producer price index fell 1.8% from a year ago, lagging forecasts and deepening from July’s 0.8% drop, extending the deflation in factory gate prices that began in late 2022. The latest data spurred calls for Beijing to roll out more forceful measures to stave off a negative cycle of falling corporate revenue, wages, and spending that many analysts believe threatens China’s longer-term growth. 

2.    Exports exceeded forecasts in August, rising 8.7% from a year earlier, up from 7% growth in July. Imports expanded a lower-than-expected 0.5% in August, easing from July’s 7.2% gain. The overall trade surplus increased to USD 91.02 billion from USD 84.65 billion in July. China’s exports have been a bright spot for its economy, which is mired in a prolonged property crisis. However, analysts cautioned that overseas demand could face volatility due to the slowing U.S. economy and rising trade tensions.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded a remarkable 5^th consecutive weekly gain, added 3.13% to its multi-year high since May 2018.  Blue chip industrials and banks led the rally. Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.

U.S Economic Slowdown Worries Weigh on Stocks

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Sep 6, major U.S. indexes suffered its worst weekly drop in 18 months, as worries over an economic slowdown appeared to weigh on sentiment. Markets have taken on a clear risk-off tone since the start of September, in part driven by the rising uncertainty in the labor market and economic data, and in part perhaps driven by a natural pause or period of profit-taking after a strong rally.

Overall, markets have rallied sharply for the first eight months of the year, with the S&P 500(SPX) and technology-heavy Nasdaq(COMP) up about 18% through August. We are now headed toward a seasonally weaker period of September and October, followed by U.S. elections on Nov. 5. Given the uncertainty in the economic data (as well as political uncertainty), combined with the strong rally earlier this year, we could expect some form of a market pause or correction in the weeks ahead. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1.    Recent labor market data has been weakening- although it’s still not recessionary. Friday’s official payrolls report showed there were 142k  jobs added in August, below consensus estimates of around 160k, while July’s gain was revised down to 89k, marking the lowest level since December 2020. The household survey revealed that the unemployment rate had ticked lower, however, from 4.3% to 4.2%. Average hourly earnings also rose 0.4%, better than expected. 

2.    The Fed will begin its rate-cutting cycle in September, and may prep the markets for larger cuts to come. It’s expected the Fed will likely cut rates by 0.25% at the September 18 FOMC meeting, bringing the fed funds rate to 5.0% – 5.25%. If market conditions deteriorate substantially between now and the Fed meeting, a 0.50% rate cut may become more likely. 

3.    Treasury yields move lower, while yield curve un-inverts: More recently, Treasury yields across the board move lower, in response to weaker labor market data as well as the potential for Fed rate cuts. Notably, the yield curve (10-year Treasury yield minus 2-year Treasury yield) has turned positive in recent days after remaining in negative territory since mid-2022. This un-inversion of the yield curve, however, tends to occur as the Fed is poised to cut rates and when the economy is softening. 

4.    Crude oil prices hit new lows of the year: The S&P Global Commodity index has also hit new lows of the year, driven in part by WTI crude oil prices, which are now around $68 per barrel. The sell-off in oil and commodities also reflects the fears of a demand slowdown globally, particularly in the Chinese market, which has been plagued with weakening consumer and economic growth. 

SPX sectors in play

Eight out of 11 SPX sectors closed with gains for the week. Stock markets rotate defensively: Thus far for September, we have already seen about a 4% pullback in the SPX. Technology(XLK) shares led the declines, driven in part by a drop in NVIDIA following rumors that it may be the subject of a Justice Department antitrust investigation, which led to a roughly USD 300 billion drop in the chip giant’s market capitalization. Energy(XLE) shares were also especially weak on the back of a decline in oil prices. Conversely, the typically defensive utilities(XLU), consumer staples(XLP), and real estate sectors(XLRE) held up better. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow(DJI) and SPX closed 1^st weekly down while Nasdaq(COMP) index recorded 2^nd weekly loss. The tech-dominated COMP index formed a lower high on its chart clearly which indicates a much weaker performance. Both DJI and SPX indexes still above their 50 weekly MA while Nasdaq(COMP) closed below it decisively. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated as investors digested weak corporate earnings and economic data. The Shanghai Composite Index(SSE) declined 2.69% and the blue chip CSI 300 lost 2.71%. In Hong Kong, the benchmark Hang Seng Index gave up 3.03%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    China’s official manufacturing purchasing managers’ index (PMI) slipped to a lower-than-expected 49.1 in August from 49.4 in July as production and new order declines deepened, the National Bureau of Statistics reported. The gauge has hovered below the 50-mark threshold, separating growth from contraction for all but three months since April 2023, according to Bloomberg. The nonmanufacturing PMI, which measures construction and services activity, edged up to an above-consensus 50.3 in August from July’s 50.2. 

2.    Separately, the private Caixin/S&P Global survey of manufacturing activity, which polls smaller, export-oriented firms, expanded to a better-than-expected 50.4 from July’s 49.8 as new orders returned to growth. The Caixin services PMI fell to 51.6 from July’s 52.1 reading, missing economists’ forecasts, as softer new work inflows and higher input costs contributed to lower staffing levels. The mixed PMI readings highlighted the uneven performance of China’s economy as a housing market slump—now in its fourth year—and rising trade tensions have weighed on the growth outlook. 

3.    New home sales extend declines. The value of new home sales by the country’s top 100 developers fell 26.8% in August year on year, accelerating from a 19.7% drop in July, according to the China Real Estate Information Corp. 

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded 4^th consecutive weekly gains, with 0.34% up. S-Reits led market gainers as investors expect U.S interest-rate cut is finally just around the corner. Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.

August Ends Upbeat After a Stormy Start

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Main Content:

1.    Major indexes weekly performance 

2.    Major indexes monthly performance 

3.    U.S stocks weekly wrap 

4.    S&P 500 sector index weekly performance 

5.    China/Hong Kong stocks weekly wrap 

6.    Singapore stocks weekly wrap 

7.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week ended Aug 30, major U.S. indexes ended mixed in a week of light trading ahead of the holiday weekend. The technology-heavy Nasdaq Composite(COMP) fared the worst, dragged lower in part by chip giant NVIDIA(NVDA), which lost nearly 10% of its value, or roughly USD 300 billion, at the stock’s low point on Thursday. Relatedly, value stocks outperformed growth shares by the largest margin since late July. Markets will be closed on coming Monday public holiday. Refer to below major indexes weekly performance table.

As we wrapped up August, stocks have staged an impressive recovery since the near 10% correction in early August, supported by a still expanding economy, positive earnings growth, and a Fed that is ready to ease. Historically, the start of a rate-cutting cycle is positive for stocks when the economy is not in a recession. Major indexes monthly performance as below.

Key highlights for the week and next:

1.    Last week all eyes were on NVIDIA, the clear leader in AI development. Often referred to in financial media as the most important stock in the world, NVIDIA represents over 6% of the S&P 500 and has a market capitalization of $3.1 trillion, second only to Apple. Given the stock's significant influence on the index and its 150% rally this year, the company's quarterly earnings report was one the most anticipated releases of this earnings season. NVIDIA exceeded consensus estimates on second-quarter sales, earnings, and third-quarter guidance, but it did so without blowing them away to the same extent that it had in prior quarters. It did not beat the lofty expectations and dropped more than 6% after earnings. 

2.    Fed offered the clearest signal yet that rate cuts are imminent. After 16 months of rate increases and 13 months of holding rates in restrictive territory, policymakers are now prepping the ground for the first rate cut of this cycle in a couple of weeks when the Fed meets on September 18. 

3.   Inflation data: Core personal consumption expenditures (PCE) price index reading released on Friday morning showed prices rising by 0.2% in July, largely as expected, although the year-over-year increase came in a tick lower than consensus, at 2.6%. Investors seemed pleased with confirmation that inflation was remaining subdued and near the Fed’s target. 

4.   September is historically one of the worst months of the year for stocks, though past isn't precedent. A key data to focus coming week will be the Friday’s (Sep 6) August nonfarm payroll report.

 

SPX sectors in play

Eight out of 11 SPX sectors closed with gains for the week. Value stocks outperformed growth shares by the largest margin since late July. Financials(XLF) and Industrials(XLI) outperformed while Tech(XLK) and Consumer Discretionary(XLY) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Dow(DJI) closed at new record, and posted its fourth record close of the week. SPX closed at its recent high, while the Nasdaq(COMP) index appears lagging behind with about 5% below its recent high, shows some weakness. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks fell as a series of corporate earnings reports missed expectations and dampened buying sentiment. The Shanghai Composite Index(SSE) lost 0.43% and the blue chip CSI 300 fell 0.17%. In Hong Kong, the benchmark Hang Seng Index gained 2.14%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.    Several China economists reduced their 2024 growth forecasts as the country grapples with a prolonged property sector slump and weak domestic demand. Retail sales, a key consumption indicator, are estimated to grow 4% this year, down from estimates of 4.5% in July, according to a Bloomberg survey of economists. The weaker outlook for China raised the prospect that the country may miss its official growth target of about 5% this year. It also raised expectations that the central bank may further loosen policy in the near term, including additional interest rate cuts and a reduction of the reserve requirement ratio for domestic lenders. 

2.    The People’s Bank of China injected RMB 300 billion into the banking system via its medium-term lending facility and left the lending rate unchanged at 2.3%. The central bank also supplemented the banking system with RMB 471 billion via its short-term seven-day reverse repos and kept the lending rate at 1.7%.

ClClick below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

STI index recorded 3^rd consecutive weekly gains, with 1.62% rise, largely attribute to SingTel’s 6.5% gains for the week. The index is about 2% away to reach its Jul peak at 3509 level. Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.