After two lower days to start the fourth-quarter, the market narrowly reversed direction yesterday to end a little higher, and Treasury yields rose following an encouraging update on the job market’s strength.  

The Dow finished 39 points higher to 42,196 led by gains in CRM and UNH of the larger variety in addition to AXP and HD. The S&P rose by 1 to 5709 with some technology advances such as NVDA and those ongoing Chinese stock advances. The Nasdaq rose by 15 to 17,925 on NVDA, ADBE, AVGO and the Chinese issues like BIDU while the Russell 2000 ended 2 points lower to 2195. And the VIX actually ended down to 18.90 despite all of the Middle Eastern hand-wringing.  

Oil prices rose again as the world waits to see how Israel will respond to Tuesday’s missile attack from Iran, but they pared their gains as the day progressed. After briefly topping $76 earlier, the price for a barrel of Brent crude settled at $73.90, up 0.5%.  

After a third-quarter which showed the Dow and S&P at all-time highs, the market went into a bad retreat to start the first day of the fourth-quart yesterday, and it looks like things can remain choppily bouncing around until this Friday’s September jobs report and then the start of the third-quart earnings season later in this month.

Equities retreated from their records Tuesday after missiles were fired from Iran into Israel, a sharp escalation of tensions in the Middle East that investors fear could lead to disruptions in the flow of oil.

The market ended higher after a choppy day on either side of unchanged and this followed a start to the week for financial markets in Asia, where Japanese stocks tumbled and Chinese indexes soared and this pattern continued what we saw for the past couple of weeks.

The Dow was able to sneak out a minor victory of 17 points to a new record high of 42,330 led by a strong gain in AAPL, plus HD, MSFT and UNH after being down by as much as 384 during the press briefing with Fed Chairman Jay Powell. The S&P advanced by 24 to 5762 led by those large technology gains plus some of the others mentioned above and it set its 43rd new high this year with its fifth straight winning month and fourth straight winning quarter.

For more than a year, the Fed had kept its main interest rate at a two-decade high in hopes of slowing the economy enough to drive inflation toward its 2% target. Now that inflation has eased substantially from its peak two summers ago, the Fed has begun to lower rates to ease conditions for the slowing job market and prevent a recession.

Of course, the risk of a downturn still looms. U.S. employers have slowed their hiring, and the inflation report on Friday also showed growth in U.S. consumer spending in August fell shy of economists’ expectations. That is important because consumer spending is the main engine of the economy.

The Fed on Wednesday lowered its benchmark rate by 0.50 percentage points. Click to see the full video announcement.

After last week’s disastrous start to the sometimes tricky month of September, which was historical in some sense as mentioned in yesterday’s Notes, the market tried to redeem itself on Monday to claw back some of the losses from their worst week in nearly a year and a half.  

The Dow rallied by 484 to 40,829 led by gains in the financial components while the S&P took an upside moonshot of 62 to 5471 with strength in the beaten-down former financial leaders plus nice gains in the financials.

Another rout hit the market to end a historic lower week, with formerly high-flying technology stocks again taking the brunt, after the August jobs report came in weak enough to add worries about the economy.

The S&P 500 dropped by an awful 95 points to end at 5498 which was its worst week since March 2023. BRCM, NVDA and other tech companies drove the market lower amid ongoing concerns that their prices soared too high in the boom around artificial intelligence, and they dragged the Nasdaq composite down by a market-leading 2.6%.

The Nasdaq made a weak late rally to end 43 points higher as NVDA had the nerve to end around 1 dollar higher after getting blasted lower for the first two days of the week. And how about AAPL and AAPL finally going higher for a change and even GOOG had the nerve to gain, which is somewhat of a miracle with all of the talk about potential antitrust charge against it. And TSLA, of all things, has finally awoken higher this week as well.  

The S&P was down by 24 at the same time and also improved from that level to cut its closing loss to 9 at 5520. Once again, some of the former large technology leaders such as AAPL, which has done really poorly this week, along with NVDA and MSFT, the three largest stocks in the index, were all lower along with the energy group as oil prices fell under $70 after all of the “experts” were saying that the price would be much higher due to the old “major geopolitical risks” situation.

The S&P was a complete downside disaster with a huge 119 points lower to 5529 hurt by one of the worst days for technology in a long time, plus weakness in the financial sector as well. U.S. stocks tumbled Tuesday to their worst day since an early August sell-off, as a week full of updates on the economy got off to a discouragingly weak start.  

The obsessively-watched NVDA, which traded 440 million shares, which has ridden the frenzy over artificial intelligence to become one of the S&P’s most influential companies, was the biggest weight on the market. Its shares fell 6.4% despite stellar results for the second-quarter. The stock, with a total market value topping $3 trillion, is still up 138% in 2024.

The market’s pullback ahead of NVDA’s quarterly results may have been partly due to news about another company tied to AI, namely SCMI.  

The recent upside motivation was the speech by Fed Chairman Powell that interest rates are finally coming down at the September 18th meeting and then there are questions about the health of the consumer and to whether the stock valuations for big tech growth companies like NVDA have become overblown relative to companies’ prospects for future growth. This report will be the elephant in the room for the market.

The market got some positive economic data to mull over Tuesday as the August Consumer Confidence report rose to 103.3 which was the highest since February. Consumer spending accounts for nearly 70% of U.S. economic activity. That has been a strong area of the economy, along with the jobs market.

Monday started off with a surprisingly good report showing that durable goods orders from U.S. factories, including cars, jumped by 9.9% in July. An update on consumer confidence is on tap for today and there will be a revised estimate on Thursday of economic growth during the second quarter.

The key report for investors this week will come on Friday, when the government serves up its latest data on inflation with the PCE, or personal consumption and expenditures report, for July. It is the Federal Reserve’s preferred measure of inflation.

Powell’s speech marked a sharp turnaround for the Fed after it began hiking rates two years ago as inflation spiraled to its worst levels in generations. The Fed’s goal was to make it so expensive for U.S. households and companies to borrow that it slowed the economy and helped bring down inflation.

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The market edged higher once again yesterday after the latest update on inflation came in almost exactly as economists expected.‍

The Dow ended up 242 to 40,008 to finish a day above the 40,000 level for the first time in nearly two weeks. It was led mainly by strength in financials such as AXP, GS, JPM, TRV in addition to UNH.

In another astounding upside day, the market exploded to the upside yesterday with its third-best performance of the year as the July P.P.I. report came in better than expected, which should motivate the Federal Reserve to accelerate its interest rate lowering situation.

The Dow jumped by 408 points to 39,765 led by gains in AAPL, MSFT, UNH and GS as only the energy components sold off. The S&P made a huge gain of 90 to 5434 as the large technology stocks finally all got their act together in a day reminiscent of the first part of the year, when their strong gains led the S&P to 34 all-time highs.

In a session that showed fairly limited final results in the major indices, the market seemed a little quiet after the tremendous volatility from last week.

The Dow, after a higher start, ended lower by 140 down to 39,357 with pressure coming from selling in BA which is going nowhere, GS after its run to all-time highs, HD ahead of its earnings this morning (which were negative) and PG, which has been sort of steady for months now.