Stocks Climb to All-Time Highs on Rate Cut Hopes

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month 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 Aug 15, U.S. stock indexes finished the week higher, largely driven by some favorable economic data that helped fuel bets that the Federal Reserve would lower short-term interest rates at its next meeting in September. Small-cap stocks led the way, as the Russell 2000 Index outperformed the S&P 500 Index by the widest weekly margin since April. The Dow Jones Industrial Average(DJI), S&P 500 Index(SPX), and Nasdaq Composite(COMP) also advanced, with the latter two notching record highs midweek before pulling back modestly by Friday’s close.

Refer to below major indexes weekly performance.

Key highlights for the week and next:

1.    Inflation remains manageable but not resolved. July’s CPI was in line with expectations, but sticky services inflation and rising producer prices suggest upside risks persist. The headline CPI held steady at 2.7%, thanks in part to a decline in gasoline prices. Meanwhile, core CPI, which excludes food and energy, rose to 3.1% from 2.9%, its highest level since February. Both figures came in largely in line with expectations, offering some relief to equity and bond investors. 

2.    Retail sales climb; consumer sentiment deteriorates on inflation concerns. Retail sales rose 0.5% month over month in July, while June’s reading was revised upward from a 0.6% to 0.9% gain. University of Michigan’s preliminary reading for its August Index of Consumer Sentiment, which unexpectedly dropped to 58.6 from July’s reading of 61.7. The month-over-month decline was largely driven by “rising worries about inflation.” 

3.    Fed rate cut. At its July meeting, the Fed held rates steady in the 4.25%–4.5% range. With inflation coming in less severe than feared and labor-market data showing signs of cooling, pushing market-implied odds of a September rate cut to more than 80%. 

4.    Tariff and trade news generally took a back seat to economic data and rate cut speculation for much of the week, although Monday brought news that the U.S. and China had agreed to extend the deadline for higher tariffs for another 90 days while a broader deal is negotiated. 

SPX sectors in play

Eight out of the 11 SPX sectors recorded weekly gains, led by the typical growth stocks, i.e. Health Care(XLV), Communication Services(XLC) and Consumer Discretionary(XLY) sectors, Utilities(XLU) and Consumer Staples(XLP) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both the Nasdaq(COMP) and SPX indexes closed at new records this week, while DJI index made intra-week record high but closed around its previous all-time high after some profit-taking. All three indexes remain on uptrend. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Mainland China stock markets advanced after the U.S. and China agreed to renew a tariff pause on each other’s products until November. The Shanghai Composite Index(SSE) added 1.70% and the blue-chip CSI 300 advanced 2.37%. In Hong Kong, the benchmark Hang Seng Index rose 1.65%. (refer to the above weekly performance table).  

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

1.    Stocks rallied early in the week on news that recent negotiations with the U.S. resulted in an additional 90-day pause on higher tariffs, delaying a steep tariff hike that was set to take effect on Tuesday and extending a truce that was agreed to in May to allow time for further trade talks. The deadline extension seemed to give investors hope that trade relations between the world’s two largest economies will stabilize and ultimately lead to a broader agreement. 

2.    China’s statistics bureau reported that consumer price growth was flat year on year in July, dropping from June’s modest uptick that snapped a four-month streak of declines. Meanwhile, factory deflation continued for the 34th consecutive month with producer prices declining 3.6%, matching June’s reading at the lowest level since July 2023. 

3.    Several other indicators released later in the week showed that China’s economic activity slowed by more than expected in July. Retail sales rose 3.7% year on year during the month, down from 4.8% in June and the slowest pace since December, according to the country’s statistics bureau. Industrial output also slowed from the prior month, growing 5.7% year on year compared with a 6.8% rise in June, as did year-to-date fixed asset investment, which rose 1.6% versus 2.7% growth in the prior year. All three readings were below economists’ forecasts.

Refer to below .HSI stocks performance of the week.

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

SSE weekly chart

.HSI weekly chart

 

Singapore

The Straits Times Index (STI) retraced 0.22% to close at 4230.53 this week, the index has been in a sideway consolidation within its four-week range. Refer to below table for STI index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports. Please comment to claim copyright ownership of any material, and I will remove it if necessary.