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Market Updates

Morning Brief

August 31st, 2023

Headline News:

The S&P 500 futures are up 11 points and are trading 0.3% above fair value. The NASDAQ 100 futures are up 18 points and are trading 0.1% above fair value. The Dow Jones Industrial Average futures are up 154 points and are trading 0.5% above fair value.

Equity futures were mixed earlier but trade with a positive disposition now. The Dow Jones Industrial Average futures outperform thanks to a big pre-open gain in a software name after it reported better-than-expected earnings and raised guidance, saying that AI is sparking a massive long-term tech buying cycle.

Market participants are looking ahead to the Personal Income and Spending report that will be released at 8:30 a.m. ET. That report features the Fed’s preferred inflation gauge in the form of the PCE and core-PCE Price Indexes. Weekly jobless claims will also be released at 8:30 a.m. ET.

Data released overnight included China’s August Manufacturing PMI, which was better than expected but still below 50.0, and Non-Manufacturing PMI, which decelerated to 51.0 from 51.5 previously. Also, flash CPI data from the eurozone showed total CPI up 5.3% year-over-year, unchanged from July, and core CPI up 5.3% year-over-year, down from 5.5% previously.

Treasury yields are slightly lower from yesterday’s settlement, which is providing a measure of support to the equity futures market. The 2-yr note yield is down two basis points to 4.86% and the 10-yr note yield is down three basis points to 4.09%.

1.35% (Michael Gibbs, Managing Director, Lead Portfolio Manager)

 

Markets:

The S&P 500 rallied for a fourth day to close higher at 4,514.87, and RSI moved past the 50 level in support of the rally. The move above the 50-day and 20-day moving averages was impressive, with two 80% upside volume days. So, the new uptrend appears to have the momentum to possibly continue the rest of the week. Potential resistance cold now comes in at 4527.37; we feel that level will be taken out if tested again today.

We are currently Intermediate-term bullish and short-term bullish.    

John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategist

 

Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.

 

The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.

 

The advance/decline line (A/D) is a technical indicator that plots the difference between the number of advancing and declining stocks on a daily basis. The indicator is cumulative, with a positive number being added to the prior number, or if the number is negative, it is subtracted from the prior number.

The A/D line is used to show market sentiment, as it tells traders whether there are more stocks rising or falling. It is used to confirm price trends in major indexes and can also warn of reversals when divergence occurs.

 

 

The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term timeframes. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.

 

The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

 

 

 

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.

 

 

 

This is not a recommendation to buy or sell any company’s stock mentioned above.

 

US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value.  US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government.  Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall, and when interest rates fall, bond prices generally rise.

 

The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange, and it is not an index of U.S.-based companies. 

 

 

 

 

 

 

 

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