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Sellers are disappearing into thin air as investors prepare for the Federal Reserve to cut interest rates for the first time since the pandemic.
The S&P 500 surged 4 percent between Friday, September 6, and Friday, September 13. It was the biggest weekly gain since the index started rallying 10 months ago. The Nasdaq-100 had an even bigger move, advancing 5.9 percent.
Relief about semiconductors connected to the AI boom helped trigger the rally.
“We are ramping Blackwell and it’s in full production,” Nvidia (NVDA) CEO Jensen Huang said on Wednesday. That eased worries that a key chip for accelerated computing would be delayed. “We’ll … start scaling in Q4 and into next year… the demand on it is so great,” he added.
The S&P 500 was sitting near its low from the previous week as Huang began speaking. It then moved straight up through the end of the week, producing the biggest positive swing since the bear market ended 23 months ago. The rally also lifted fellow chipmaker Broadcom (AVGO), which had fallen sharply the previous week.
Some of the move likely resulted from overly bearish sentiment. S&P Global reported that risk appetite hit a 16-month low in September. The American Association of Individual Investors cited the least bullishness in over three months and the National Association of Active Investment Managers noted stock exposure was near its lows of the year.
Those conditions may not be a surprise because every September has been negative since 2020. The two months preceding U.S. Presidential elections have also been periods of weakness for the market.
But some investors may think this time will be different. After all, the European Central Bank just lowered interest rates and the Fed is expected to follow suit at 2 p.m. ET on Wednesday. CME’s FedWatch tool showed almost even probabilities between a cut of 25 basis points and 50 basis points, following a dovish swing on Friday. (The market is pricing in zero percent odds of no cut.)
| Biggest Gainers in the S&P 500 Last Week | |
| Broadcom (AVGO) | +22% |
| Super Micro Computer (SMCI) | +18% |
| Warner Bros. Discovery (WBD) | +18% |
| Vistra (VST) | +16% |
| Nvidia (NVDA) | +16% |
The consumer price index (CPI) dropped to 2.6 percent, its lowest level since March 2021. Energy costs also continued lower after OPEC and the International Energy Agency predicted weaker demand.
Those trends have not only lowered interest rates. They’ve boosted consumer sentiment, which has been inching higher since June and beat estimates again last week. Corporate executives are taking notice as well.
For example, FactSet observed that fewer companies are citing inflation as a concern on conference calls. Mentions of AI, on the other hand, are increasing.
Speaking of AI, Oracle (ORCL) surged 14 percent last week after hiking its guidance on strong datacenter demand. It also announced a cloud-computing partnership with Amazon.com’s (AMZN) AWS. It was ORCL’s biggest weekly gain in more than a year.
Technology was the strongest sector last week, supported by chip stocks like AVGO and software companies like ORCL. However, gold and silver miners had the biggest gains overall, according to TradeStation data. The moves followed rallies in precious metals as traders react to lower interest rates in Europe and the U.S.
Consumer discretionaries were the No. 2 sector, bolstered by AMZN and Tesla (TSLA). Cruise-ship operators and homebuilders were strong as well. Starbucks (SBUX) also climbed as new CEO Brian Niccol outlined plans to restore the company’s traditional coffeehouse identity.
Energy was the only sector to fall last week. Financials also lagged after JPMorgan Chase (JPM) issued cautious guidance and regulators took action against Wells Fargo (WFC).
The S&P 500’s biggest technical achievement last week was probably holding the 5,400 area. This has a few potential significances.
First, it’s near a low from mid-June after the index shot to new highs. It was also a low in late July. Next, it’s near the bottom of the large bearish outside day on August 1.
Perhaps most importantly: It represents a 50 percent retracement of the rebound from the early-August selloff. That may confirm an upward direction.
| Biggest Decliners in the S&P 500 Last Week | |
| Humana (HUM) | -10% |
| Tyson Foods (TSN) | -6.8% |
| Moderna (MRNA) | -6.3% |
| APA (APA) | -5.2% |
| Bath & Body Works (BBWI) | -4.8% |
Next, the index is back above its 21-day exponential moving average and 50-day simple moving average. That may further suggest it’s still in an uptrend.
Aside from the big Fed meeting on Wednesday, this week features a few other economic and earnings reports. Housing, in particular, is in focus.
Nothing important is scheduled for today.
Retail sales — a potentially key number — are tomorrow morning, followed by NAHB’s homebuilder sentiment index.
Wednesday morning brings housing starts, building permits and crude-oil inventories. The Fed issues its interest-rate statement and projections of future policy at 2 p.m. ET. Chairman Jerome Powell gives a press conference 30 minutes later.
Initial jobless claims and existing home sales are on Thursday morning. FedEx (FDX) and Lennar (LEN) announce quarterly results after the closing bell.
Nothing important is scheduled for Friday.
Downloads are available here. TradeStation’s ideas on TradingView are available here. Check out our next “State of the Market,” on Monday, 1/16. Sizing Up the S&P 500 S&P 500 falls the most since 8/5, hits low of month Prices under 8-, 21-day EMAs, 50-day MA...
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