Market closed near all-time highs in August, large caps outperformed, Fed signals likely rate cut

From Nasdaq: 2024-09-03 10:23:53

In August, major averages closed near all-time highs, with large caps outperforming small and microcaps. The Fed indicated a likely rate cut in September, triggering the Sahm Rule. Corporate earnings for Q2’24 were mixed, as 49% beat revenue estimates, and 79% exceeded EPS expectations. Energy and financial sectors reported the largest upside surprises.

The market rebounded in August after an initial decline driven by economic growth concerns. The July nonfarm payrolls fell short of expectations, prompting fears of a potential hard landing. However, Fed signals of a likely rate cut in September boosted confidence in a soft landing scenario. The Treasury rally continued, and defensive sectors outperformed the market.

Earnings reports for Q2’24 show mixed results, with 49% of companies beating revenue estimates and nearly 80% surpassing EPS expectations. Energy and financial sectors reported the largest surprises. Sales and earnings growth varied across sectors, with technology leading sales growth and financials showing strong EPS growth. Materials and industrials reported negative EPS growth.

Looking ahead, the market may face volatility in September. Economic reports leading up to the Fed’s meeting on Sept. 18 will be crucial, with expectations of a 25bps rate cut. The possibility of a 50bp cut remains depending on jobless claims and payrolls numbers. The economic calendar includes important data releases and the triple witching on Sept. 20.



Read more at Nasdaq:: August 2024 Review and Outlook