Morning Brief
Headline News:
Equity futures point to a subdued start to the week as investors prepare for the unofficial start of the Q3 earnings season, with several major banks scheduled to report results in the coming days.
Stocks are coming off a winning week in which broader market participation helped offset weakness in technology stocks, a reversal of the recent trend of narrow market leadership. The Equal-Weight S&P 500 snapped a seven-week losing streak, highlighting the improvement in participation beyond the largest stocks.
The AI infrastructure buildout remains in focus this morning, with several notable M&A headlines drawing attention to the space.
Meanwhile, crude oil prices are moving higher despite comments from President Trump that Russia and Ukraine have agreed to an “energy ceasefire.” According to Axios, Ukrainian President Volodymyr Zelensky said the agreement was “news to me,” although he indicated that Ukraine would also agree to an energy ceasefire if Russia committed to one.
There are no U.S. economic releases remaining today, though this week will feature some key inflation data with the release of the September Consumer Price Index on Wednesday and Producer Price Index on Thursday.
(Michael Gibbs, Managing Director, Lead Portfolio Manager )
Markets:
The S&P 500 rallied to close at 7,811.54, just below the potential resistance level at 7,816.70. The index appears positioned to challenge this resistance and potentially break out to new all-time highs today. However, the technical indicators continue to raise some concerns. Both the Relative Strength Index (RSI) and the Advance/Decline line have failed to confirm the recent strength in the S&P 500, suggesting that bullish momentum and market breadth remain less supportive of a sustained breakout.
While the near-term trend remains positive, these divergences suggest that any move to new highs could be vulnerable to profit-taking without broader market participation. Additionally, the anticipated release of the September Consumer Price Index (CPI) report on Wednesday could keep investors cautious and trading activity subdued ahead of the inflation data. A period of consolidation near current levels would be constructive and could help establish a stronger foundation for the next leg higher.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
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 due to underlying commodity 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 percentage of stocks trading above a specific moving average is a breadth indicator that measures the underlying index’s internal strength or weakness. 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 represents approximately 8% of the Russell 3000 Index’s total market capitalization.
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 by the federal government’s timely payment of principal and interest. 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 comprising 103 equity securities of 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange and not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it tracks smaller companies that operate in the U.S. market.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure serves as an indicator of market breadth and reflects the extent to which price movements are broadly distributed across NYSE-listed securities.