This week, all eyes were on Jerome Powell and the FOMC meeting, with Wednesday’s announcement being one of the most anticipated market events of the year. The Fed delivered a 50bps rate cut, exceeding expectations and sparking a rally that briefly pushed all of the major indexes to new monthly highs. In other news;
- A Breakdown Of The FOMC Announcement
- SpaceX Starlink Inks Deal With United Airlines
- Intel and AWS Expand Partnership
- Walmart’s Pay-by-Bank Launch
Now that the pivotal rate decision is behind us, the indexes are starting to show short-term overbought signals. Let’s dive into the charts and break down where things stand as we wrap up the week.
Weekly Analysis
SPY (SPDR S&P 500)
Despite hitting new all-time highs, the SPY ETF was the weakest performer in percentage terms, finding resistance at the upper Bollinger Band and closing the week at $568.25 (+1.10%). Notably, the last two reversals were signaled by bearish crosses in overbought territory on the Stochastic Oscillator, a pattern that’s reemerging now.
QQQ (Invesco QQQ Trust)
The QQQ ETF benefited from the FOMC excitement this week, reaching a new monthly high and closing at $482.44 (+1.49%). However, like the SPY, it’s now showing signs of a potential reversal, with a bearish Stochastic cross forming as the price stalls just below the upper Bollinger Band.
IWM (iShares Russell 2000)
With their sensitivity to interest rates, the stocks in the IWM ETF stand to benefit the most from this week’s rate cut—and the market took notice. The index posted the largest percentage gain, closing the week at $221.57 (+2.18%). A bearish cross of the Stochastics appears imminent while the price is facing resistance at the upper Bollinger Band.
Earnings
Notable Results
FDX (Fedex)
- EPS: $3.60 vs $4.80 est
- SALES: $21.60B vs $21.96B est
GIS (General Mills)
- EPS: $1.07 vs $1.06 est
- SALES: $4.85B vs $4.80B est
LEN (Lennar Corp.)
- EPS: $3.90 vs $3.63 est
- SALES: $9.42B vs $9.16B est
FERG (Ferguson Enterprises)
- EPS: $2.98 vs $2.86 est
- SALES: $7.95B vs $8.00B est
DRI (Darden Restaurants)
- EPS: $1.75 vs $1.83 est
- SALES: $2.76B vs $2.80B est
CBL (Cracker Barrel)
- EPS: $0.98 vs $1.10 est
- SALES: $894.39M vs $897.22M est
MLKN (MillerKnoll, Inc)
- EPS: $0.36 vs $0.40 est
- SALES: $861.50M vs $889.30M est
SCS (Steelcase Inc.)
- EPS: $0.39 vs $0.37 est
- SALES: $855.80M vs $864.10M est
FDS (Factset Research Systems)
- EPS: $3.74 vs $3.62
- SALES: $569.19M vs $546.81M
What’s Happening Now
SPX (S&P 500)
Over the last fifty years, there have been a few instances where the Federal Reserve cut interest rates in the U.S. election cycle, such as in 2008, 2000, 1992, and 1980. Historical SPX seasonality data from these years show that October tends to be the worst month for markets, followed by a relief rally into year-end. However, the first quarter of the following year has often struggled, with markets moving lower or posting only marginal gains.
SPY (S&P 500)
Sell the news? Markets initially rallied after the Federal Reserve’s first rate cut since 2020, bringing the target range to 4.75%-5%. While the S&P 500 ended the week on a high, caution remains. The Fed made a similar 50 bps cut on September 18, 2007, just before the 2008 crash. To add insult to injury, next week is historically the worst-performing time of the year for the SPY, so proceed with caution.
PLTR (Palantir)
In an unusual shift, Palantir CEO Alex Karp sold over $316 million in PLTR stock last week. While Karp has regularly sold shares this year, the scale of his recent disposals is up to 20 times larger than his typical transactions. This mirrors a similar trend at Dell, where insiders are also accelerating share sales ahead of both companies’ upcoming inclusion in the S&P 500.
Believe it or not, this is just a fraction of what happened in the markets this week. For a full run down delivered straight to your inbox every weekend, sign up for The Official Trendspider Newsletter!
Market Update Into September 7th: Inflation Data Incoming