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Check out our next “State of the Market,” on Monday, 8/12. (Time now at at 2 p.m. ET.)
Sizing Up the S&P 500
- S&P 500 rebounds to 50-day MA, erasing more than 50% of its peak-to-trough decline
- Potential resistance with falling trendline and 8/1 bearish outside day
- Potentially important levels:
- 7/25 low of 5391
- 8/2 low of 5302
- Lack of catalysts, “dog days” of summer may create difficult period through Labor Day.
News & Views
- Value moves continue:
- SBUX rallies on CEO change
- K acquired
- CSCO rallies on cost cuts
- Inflation:
- CPI under 3% for 1st time in 3+ years
- PPI +2.2% vs +2.6% estimate
- Reuters/S&P Global: AI boosting data centers’ long-term electricity demand by about 50%, according to utility companies.
- Dan Ives of Wedbush: Channel checks may suggest iPhone “super cycle” is starting.
- OPEC, IEA cut oil demand forecasts amid Chinese weakness
- FactSet: Q2 revenues growing the fastest since Q4 of 2022
- Mortgage applications: Biggest refi activity since pandemic
Examining Sentiment
- University of Michigan’s consumer sentiment index is at levels comparable to the recession year 1982, despite the “misery index” (unemployment + CPI) being less than half 1982’s reading.
- Notice how 1995 and 2005 had higher sentiment despite higher misery index readings.
- Unhappiness about inflation and politics have contributed to the negativity.
- Does this create potential for increased optimism and risk appetite?
- Retail money market fund balances +90% from May 2023-July 2024, even with S&P 500 +32% in that period.
| Unemployment | CPI (headline y/y) | Misery Index | Consumer Sentiment | |
| 1982 | 9.2% | 6.6% | 15.8 | 65.7 |
| 1995 | 5.7% | 2.8% | 8.5 | 92.3 |
| 2005 | 5% | 3.1% | 8.1 | 94.8 |
| 2024 | 4.3% | 2.9% | 7.2 | 66.4 |
Upcoming Events
- Fri 8/16: Housing starts, consumer sentiment
- Tues 8/20:
- Earnings: LOW
- Wed 8/21: Crude oil inventories, Fed minutes
- Earnings: TGT M SNOW
- Thu 8/22: Jobless claims
- Note: Powell may speak at Jackson Hole on Fri 8/23
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