The weekly market reports include a market position update, a stock market forecast, and an analysis of capital markets. To access the full report, you must subscribe to Premium Articles, Weekly Premium Articles, or an All-in-One subscription.
Included in this report:
- Weekly summary.
- Market positioning update.
- Stock market forecast.
- Capital markets update.
1. Weekly Summary (July 29–August 2, 2024)
- The stock market rout continued after an accumulation of adverse geopolitical and economic developments.
- In the last three weeks, there has been an explosive mix of a failed political assassination attempt, a massive IT failure, increased uncertainty after the release of economic data, and severely escalating geopolitical tensions.
- The Sahm rule’s triggering has sparked discussion on social media about a recession. Section 4 includes our comments.
- Large-cap stocks (SPY) fell 2.1%. The losses in the last three weeks have totaled 5.6%.
- The fixed-income market rallied primarily due to a “flight to quality,” but also due to data showing that the odds of a recession have increased. Long-duration bonds (TLT) surged 6% on the week.
- Commodities (DBC) fell 1.5% amid rising odds of an economic slowdown. For the week, crude oil futures plunged 4.7%.
- Due to rising geopolitical uncertainty, Gold (GLD) finished the week up 2.1% at new all-time highs, after rising as much as 3.7%.
- The US dollar index (UUP) ended the week down 0.9% due to expectations of multiple rate cuts by the end of the year.
- Gold (GLD) has outperformed stocks (SPY) since January 3, 2022, with a return of 31.8% versus 16.5%, respectively.
- Since January 3, 2022, bonds (TLT) have been down 28.1%, while large-caps (SPY) have gained 16.5%.
- For the week, the equally weighted magnificent six stocks fell 1.9%. AMZN plunged 8%, NVDA lost 5.2%, and META gained 4.8%.
- The utilities sector (XLU) surged 4.3%, while the technology sector (XLK) plunged 5.3%.
Year-to-date relative sector performance
The utilities sector (XLU) is the best-performing sector year-to-date, with a 19.1% return after this week’s rally.
Year-to-date relative asset performance
Gold (GLD) is the best-performing asset year-to-date, with a gain of 17.9%. Bonds (TLT) moved into positive territory (+1.7%) this week, while commodities (DBC) fell into negative territory (-0.6%). The relative performance of bonds and commodities could be a signal of a regime change, but further confirmation is required.
2. Market positioning update
To provide market position updates, we use two cross-sectional momentum long-only strategies for capital markets and factor ETFs.
Last update: Friday, August 2, 2024, after the market close.
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Specific disclaimer: This report includes charts that may reference price levels. If market conditions change the price levels or any analysis based on them, we may not update the charts. All charts in this report are for informational purposes only. See the disclaimer for more information.
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Charting and backtesting program: Amibroker. Data provider: Norgate Data
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