Weekly Wrap

The stock market posted a broadly positive week, led by gains in the tech-heavy Nasdaq Composite (+2.0%) and the S&P 500 (+1.6%), while the Dow Jones Industrial Average (+1.0%) and smaller-cap indices finished with more modest results. The Russell 2000 (+0.3%) and S&P MidCap 400 (-0.4%) underperformed, highlighting the market’s reliance on mega-cap strength. The S&P 500 Equal Weight Index (+0.3%) lagged the market-weighted index, further underscoring the influence of the largest components.

Th information technology sector (+3.1%) was the standout sector this week, fueled by strong moves in the mega-cap cohort and broad optimism in semiconductor names. The Vanguard Mega Cap Growth ETF (+2.0%) reflected this dynamic, while the PHLX Semiconductor Index (+4.2%) climbed in response to AI-related enthusiasm and company-specific gains.

Oracle’s (+25.5%) remarkable mid-week surge following its RPO update propelled the technology sector and created volatility across the “magnificent seven,” emphasizing the outsized influence of single-company moves.

Tesla (TSLA, +12.9%) and Broadcom (AVGO +7.5%) were among other notbale mega-cap moves.

In other corporate news, Paramount Skydance’s (+25.3%) potential acquisition of Warner Bros. Discovery (+55.8%) propelled both stocks higher despite regulatory concerns.

Economic data reinforced expectations of a continued easing cycle. While the August PPI print came in slightly hotter than expected (0.4%; Briefing.com consensus: 0.3%), and Core CPI met expectations at 0.3%,  a 27,000 spike in initial jobless claims to 263,000 (Briefing.com consensus: 240,000), their highest level since October 2021, bolstered the market's current rate cut expectations through the end of the year. 

Overall, the combination of strong technology leadership, encouraging rate cut expectations, and select corporate news allowed the S&P 500,  Nasdaq Composite, and DJIA to all set record highs this week, even as pockets of weakness persisted.

• Nasdaq Composite: +2.0% WTD
• S&P 500: +1.9% WTD
• DJIA: +1.0% WTD
• Russell 2000: +0.3% WTD
• S&P Mid Cap 400: -0.4% WTD

Monday:

Early strength in the market’s top-weighted names lifted the Nasdaq Composite (+0.5%) to a record high of 21,885.62, while the S&P 500 (+0.2%) and DJIA (+0.3%) closed with more modest gains.

The information technology (+0.7%) and consumer discretionary (+0.5%) sectors led the way for the entirety of the session, supported by strong leadership in their mega-cap components. A flurry of late afternoon buying activity saw the materials (+0.2%) and industrials (+0.2%) sectors eke out a modest gain, while the financials sector finished on its flatline.

The Vanguard Mega Cap Growth ETF advanced 0.7%, with the mega-cap advantage helping the market-weighted S&P 500 (+0.2%) outperform the S&P 500 Equal Weighted Index (-0.1%).

A mix of semiconductor strength and earnings buzz kept the technology sector seated as the top-performing S&P 500 sector.

The PHLX Semiconductor Index closed with a 0.9% gain. Broadcom (AVGO 345.65, +10.76, +3.21%) was a notable standout, with the stock continuing to trade higher following the company's impressive earnings report Friday before the open.

Oracle (ORCL 238.50, +5.70, +2.45%) finished with a nice gain ahead of its own earnings report after the close tomorrow.

Meanwhile, Apple (AAPL 237.88, -1.81, -0.76%) traded lower ahead of the company's annual September showcase tomorrow, at which reports predict the company will unveil the iPhone 17 along with a slimmer model of the iPhone.

Within the consumer discretionary sector, Amazon's (AMZN 235.84, +3.51, +1.51%) advance was enough to offset a loss in Tesla (TSLA 347.34, -3.50, -1.00%), which traded lower following a report from Reuters that showed Tesla's U.S. market share has fallen to its lowest level since 2017 as the company faces increasing competition in the EV space.

The communication services sector (-0.3%) spent most of the day among the best-performing sectors, though it finished lower as Alphabet (GOOG 234.16, -1.01, -0.43%) ceded its early gain.

The sector also faced pressure in its telecom components T-Mobile US (TMUS 242.90, -9.86, -3.90%), Verizon (VZ 43.32, -1.06, -2.39%), and AT&T (T 28.92, -0.68, -2.28%) following EchoStar's (SATS 80.63, +13.39, +19.91%) $17 billion spectrum sale to SpaceX.

Smaller-cap indices had a subdued performance, with the Russell 2000 (+0.1%) shaking off early weakness to the tune of a slight gain, while the S&P Mid Cap 400 finished flat.

Ultimately there was not a great deal of conviction on the part of buyers or sellers today.

Breadth figures reflected this notion, with advancers outpacing decliners by a slim 5-to-4 margin on the NYSE and a roughly 13-to-9 margin on the Nasdaq.

Besides a 1.1% loss in the thinly traded utilities sector, gains and losses were limited to a maximum of 0.7% across the other ten S&P 500 sectors.

At the index level, the market benefitted from investors buying the dip in mega-cap names from Friday's retreat, with a lack of notable developments preserving but not furthering the early gains. The market now turns to the release of August PPI and CPI data as the next key drivers of market direction. Corporate headlines were otherwise relatively quiet, though Robinhood Markets (HOOD 117.28, +16.03, +15.83%) and AppLovin (APP 547.04, +56.80, +11.59%) traded sharply in response to their addition to the S&P 500 before the open on September 22.

U.S. Treasuries climbed to begin the week, with 10s and 30s adding to their big post-NFP gains from Friday while the short end started higher, but pulled back as the day went on. The 2-year note yield settled down two basis points to 3.49% and the 10-year note yield settled down four basis points to 4.05%.

Reviewing today's data:

• Consumer credit increased by $16.0 billion in July (Briefing.com consensus: $10.5 billion) following a downwardly revised $4.3 billion decline (from +$7.4 billion) in June.
  
  • The key takeaway from the report is that the expansion in consumer credit was driven by revolving credit, which saw the largest jump since January 2024. That might be construed as a sign that consumers are using credit cards more to fund everyday purchases in the face of higher costs, but noticing the jump in nonrevolving credit in July suggests that may not be fully accurate in a broad sense.

Tuesday:

With little in the way of macro catalysts or corporate news, the major averages traded sideways for much of the session before an uptick in buying activity saw the Nasdaq Composite (+0.4%) establish a new record high (21,891.42) and closing high, while the S&P 500 (+0.3%) and DJIA (+0.4%) captured record closing highs of their own.

The major averages benefitted from broad-based sector strength, with the communication services sector (+1.7%) leading the way, supported by strong leadership in its mega-cap components, Alphabet (GOOG 239.94, +5.78, +2.47%) and Meta Platforms (META 765.70, +13.40, +1.78%).

Mega-caps as a unit had a relatively subdued session, though they especially benefitted from the late afternoon buying pickup. The Vanguard Mega Cap Growth ETF (+0.3%) closed with a decent gain after spending the day oscillating around its flatline.

Yesterday's top movers, the information technology (flat) and consumer discretionary (+0.1%) sectors, clawed just above their opening levels after a long stint in negative territory, though their improvement was particularly supportive to the final standings of the S&P 500 and Nasdaq Composite.

While today's advances were modest in nature, they were broad-based, as only the materials (-1.6%), industrials (-0.7%), and real estate (-0.1%) sectors finished lower.

Despite a scarcity of corporate headlines, UnitedHealth (UNH 348.18, +27.93, +8.72%) made a significant upward move following amendments to the company's guidance disclosure.

Meanwhile, Apple (AAPL 234.35, -3.53, -1.48%) traded lower following the company's annual product launch event, with investor focus on iPhone pricing. The iPhone Air will debut at $999 as the slimmer entry model, while the price of the iPhone Pro rose by $100 to $1,099.

There were no notable economic data releases today, though attention centered on the preliminary benchmark revision to payroll growth estimates for March 2024-March 2025. The revision showed a record overstatement of 911,000 jobs, confirming expectations for a significant downward adjustment.

The stock market had a muted reaction to the revision, as rate cut expectations hardly changed in response. The market is still fully pricing in a 25-basis point rate cut at the September FOMC meeting, while the CME FedWatch assigns an 8.2% probability of a 50-basis point cut, down from 10.6% yesterday.

While smaller cap indices might have gained momentum in response to heightened expectations for a 50-basis point cut, the Russell 2000 retreated 0.6%, with the S&P Mid Cap 400 slipping 0.9%.

Market focus now turns to tomorrow's release of August PPI data, with CPI to follow on Friday. Those inflation readings, if hotter than expected, could revive concerns about the broader health of the economy and test the market's conviction in its current rate cut expectations for the October and December FOMC meetings.

U.S. Treasuries retreated on Tuesday, making for a shallow pullback after four days of gains that sent yields to their lowest levels in at least three months. There was some light buying after the U.S. Treasury kicked off this week's note and bond auction slate with a strong sale of 3-year notes that saw stellar foreign demand. The 2-year note yield settled up five basis points to 3.54% and the 10-year note yield settled up three basis points to 4.72%.

Reviewing today's data:

• The NFIB Small Business Optimism Index rose to 100.8 in August from 100.3 in July.

Wednesday

The stock market's early strength, fueled by Oracle's (ORCL 328.33, +86.82, +35.95%) massive RPO update and an encouraging August PPI print, quickly lifted the S&P 500 (+0.3%) and Nasdaq Composite (flat) to fresh record highs. However, momentum faded as the session wore on, with investors showing reluctance to extend gains, leaving the major averages to close well below their early peaks.

The S&P 500 set an all-time high level of 6,555.97 this morning and captured a record closing high of 6,532.04. The Nasdaq Composite set an all-time high of 22,000.97 around the same time and eked out a record closing high of 21,886.06. The DJIA (-0.5%) never breached its flatline, highlighting pockets of weakness in today's market.

Oracle's extraordinary upwards move was the main driver of action today. Investors were enthused by the company's remaining performance obligations (RPO), which skyrocketed to $455 billion, up 359% year-over-year, as the company has locked in substantial cloud contracts among major AI players.

Semiconductor names benefitted from increased optimism around AI growth potential, with the PHLX Semiconductor Index closing with a 2.4% gain. NVIDIA (NVDA 177.33, +6.57, +3.85%) and Broadcom (AVGO 369.57, +32.90, +9.77%) were among some of the market's largest names that benefited from Oracle's move and contributed to gains at the index level.

The broader technology sector finished with a 1.8% gain, tying the energy sector (+1.8%) as the best-performing among the eleven S&P 500 sectors.

Not all mega-cap tech names found themselves on the right side of today's action. Amazon (AMZN 230.33, -7.91, -3.32%), Apple (AAPL 226.79, -7.56, -3.23%), and Meta Platforms (META 751.98, -13.72, -1.79%) all incurred notable losses. Oracle's arrival as an even larger player than previously thought within the AI realm could reflect some reallocation of capital away from some of the "magnificent seven" names that have garnered an outsized share of the market's attention.

The Vanguard Mega Cap Growth ETF finished flat for the day as a result.

Sector strength was also an almost even split, with six S&P 500 sectors trading lower. The consumer discretionary (-1.6%), consumer staples (-1.1%), health care (-0.9%), and communication services (-0.9%) sectors closed with the widest losses, while the financials (-0.3%) and real estate (-0.1%) sectors faced more modest retreats.

On the monetary policy front, a deflationary reading of the August PPI (-0.1%; Briefing.com consensus 0.3%) and Core PPI (-0.1%; Briefing.com consensus 0.3%) helped equities surge out of the gate. Rate cut expectations through the end of the year changed very little, which is a sign of strength, as the market is currently expecting 75-basis points of rate cuts before year's end.

While the market rallied around today's earnings and economic data, a steady retreat from session highs reflects a hesitancy to push further into record territory, as investors balance AI-driven growth with historically high valuations.

The market's next test will be tomorrow's August CPI report, which, in conjunction with the weekly jobless claims data, will put October and December rate cut expectations in focus.

U.S. Treasuries climbed on Wednesday after overcoming some early softness with help from the August PPI report and a strong $39 billion 10-year note reopening. The 2-year note yield settled down three basis points to 3.53%, and the 10-year note yield settled down four basis points to 4.03%.

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 9.2%; Prior -1.2%
• August PPI -0.1% (Briefing.com consensus 0.3%); Prior was revised to 0.7% from 0.9%, August Core PPI -0.1% (Briefing.com consensus 0.3%); Prior was revised to 0.7% from 0.9%
  
  • The key takeaway from the report is that it will ease the market's angst about pass-through effects for consumers, especially with the index for final demand services sliding 0.2% month-over-month. The added takeaway is that this report will keep the market locked on its view that there will be at least 75 basis points of rate cuts by the Fed before the end of the year.
• July Wholesale Inventories 0.1% (Briefing.com consensus 0.2%); Prior 0.2%

Thursday:

This morning's economic data strengthened the market's rate cut expectations through the end of the year, sending the S&P 500 (+0.9%), Nasdaq Composite (+0.7%), and DJIA (+1.4%) to record intraday and closing highs as stocks mounted a broad-based advance. 

While the August PPI print came in slightly hotter than expected (0.4%; Briefing.com consensus: 0.3%), and Core CPI met expectations at 0.3%, today's focus centered around a 27,000 spike in initial jobless claims to 263,000 (Briefing.com consensus: 240,000), their highest level since October 2021. 

While neither data report was particularly comforting, investors were, at least for the short term, enthused by the effect the weaker labor data had on near-term rate cut expectations.

According to the CME FedWatch tool, there is now a 92.4% probability of at least a 25 basis point cut to 3.75-4.00% at the October FOMC meeting versus 80.9% yesterday, and an 86.2% probability of at least a 25 basis point cut to 3.50-3.75% at the December FOMC meeting versus 74.5% yesterday.

A 25-basis point rate cut at next week's FOMC meeting was fully priced in entering today's session. 

Stocks largely moved higher in response to the bolstered rate cut odds, with the major averages charting new record highs all the way through to the close. 

Ten S&P 500 sectors closed with gains, with only the energy sector finishing flat as crude oil futures settled today's session $1.31 lower (-2.1%) at $62.36 per barrel.

Meanwhile, the materials (+2.1%), health care (+1.7%), consumer discretionary (+1.7%), financials (+1.7%), and real estate (+1.6%) sectors closed with gains wider than 1.5%. 

Despite only a modest flow of corporate headlines, there were some impressive individual moves today.

Centene (CNC 34.08, +2.82, +9.00%) moved higher after reaffirming its FY25 guidance, Micron (MU 150.57, +10.57, +7.55%) benefitted from a price increase to $175 from $150 at Citigroup, and a Wall Street Journal report that Paramount Skydance (PSKY 17.50, +2.39, +15.82%) is preparing a majority cash bid for Warner Bros. Discovery (WBD 16.17, +3.63, +28.95%) sent both stocks sharply higher.

Tesla (TSLA 368.81, +21.02, +6.04%) was the top performer among the market's largest names amid a relatively subdued session for the mega-caps. The Vanguard Mega Cap Growth ETF closed with a 0.5% gain.

While most pockets of the market displayed strength today, homebuilder names outperformed in response to the bolstered rate cut probabilities, sending the iShares U.S. Home Construction ETF up 2.8%.

Outside of the S&P 500, smaller-cap indices relished in the prospect of a friendlier future rate environment. The Russell 2000 advanced 1.8%, and the S&P MidCap 400 added 1.6%.

On the policy front, CNBC reported that the Senate will vote Monday on Stephen Miran's Fed Governor nomination, potentially seating him in time for the September FOMC meeting. Separately, Treasury Secretary Scott Bessent signaled he intends to expand the list of candidates under consideration for President Trump's next Fed Chair nomination.

U.S. Treasuries ended Thursday with slim gains in longer tenors, while the short underperformed as the market pondered the implications of today's economic data. The entire complex faced some pressure during the final two hours of action even though the U.S. Treasury completed this week's strong note and bond auction slate with a 30-year bond reopening that was right on the screws.

The 2-year note settled unchanged at 3.53%, the 10-year note yield settled down two basis points to 4.01%, and the 30-year note yield settled down three basis points at 4.65%. 

Reviewing today's data:

• August CPI 0.4% (Briefing.com consensus 0.3%); Prior 0.2%, August Core CPI 0.3% (Briefing.com consensus 0.3%); Prior 0.3%
  • The key takeaway from the report (for Main Street) is that food prices were starkly elevated in August (+0.5%), as were shelter (+0.4%), apparel (+0.5%), transportation services (+1.0%), and gasoline (+1.9%) prices.
• Weekly Initial Claims 263K (Briefing.com consensus 240K); Prior was revised to 236K from 237K, Weekly Continuing Claims 1.939 mln; Prior was revised to 1.939 mln from 1.940 mln
  • The key takeaway from the report is rooted in the eye-opening initial jobless claims print, which will be construed in the market's mind as a weakening labor market signal and another basis for the Fed to cut rates in September, as well as in October and December.
• The Treasury Budget for August showed a deficit of $344.8 billion compared to a deficit of $380.1 billion in the same period a year ago. The August deficit resulted from outlays ($689.1 billion) exceeding receipts ($344.3 billion). The Treasury Budget data are not seasonally adjusted so the August deficit cannot be compared to the July deficit of $291.1.
  • The key takeaway from the report is that it underscores the large budget deficit the Treasury is running and how much larger it would be if not for the ramp-up in customs duties this fiscal year.

Friday:

The stock market traded in a mixed fashion on the heels of yesterday's rate cut optimism-fueled rally, though strong performances across the mega-caps pushed the Nasdaq Composite (+0.4%) and S&P 500 (-0.1%) to fresh record highs.

The tech-heavy Nasdaq Composite benefitted the most from today's advance, establishing a new all-time high of 22,182.34 and a record closing high of 22,141.10.

The S&P 500 set a record high of 6,600.21 shortly before the close, but the index ran into some round number resistance at that mark and promptly retreated beneath its flatline.

Meanwhile, the DJIA (-0.5%) traded lower for the duration of the session, reflecting pockets of weakness in the broader market. 

Only the utilities (+0.6%), consumer discretionary (+0.6%), information technology (+0.5%), and communication services (+0.2%) sectors closed with a gain, though these sectors (with the exception of the thinly traded utilities sector) have the highest concentration of mega-cap names. 

Most notably, Tesla's (TSLA 395.94, +27.13, +7.36%) strong move saw it finish with a 12.9% gain for the week, helping to mask Amazon's (AMZN 228.15, -1.80, -0.78%) loss in the consumer discretionary sector.

Microsoft (MSFT 509.90, +8.89, +1.77%) and Apple (AAPL 234.07, +4.04, +1.76%) supported the information technology sector, which saw just modest strength in its chipmaker names, pushing the PHLX Semiconductor Index to a 0.2% gain.

Though not mega-caps themselves, Paramount Skydance's (PSKY 18.79, +1.33, +7.62%) potential majority-cash acquisition of Warner Bros. Discovery (WBD 18.91, +2.74, +16.94%) pushed both stocks higher for the second consecutive day in the communication services sector, despite a report from Bloomberg today that the transaction will likely face regulatory headwinds. 

The sector's largest names, Alphabet (GOOG 241.28, +0.50, +0.21%) and Meta Platforms (META 755.59, +4.69, +0.62%), moved slightly higher late in the afternoon, helping the sector finish near session highs. 

Ultimately, the market's heaviest components played a crucial role in limiting losses at the index level. The Vanguard Mega Cap Growth ETF closed with a 0.6% gain, and the market-weighted S&P 500 (-0.1%) outperformed the S&P 500 Equal Weighted Index (-0.8%). 

While losses were relatively broad-based, they were also modest. Only the health care sector (-1.1%) closed with a loss wider than 1.0%. COVID vaccine stocks such as Moderna (MRNA 23.51, -1.88, -7.40%) and Pfizer (PFE 23.89, -0.97, -3.90%) dipped following a Washington Post report that suggested health officials from the Trump administration plan to link COVID vaccines to the deaths of 25 children.

The sector also faced pressure in its biotech names, with the iShares Biotechnology ETF slumping 2.0% today. 

Outside of the S&P 500, smaller cap indices such as the Russell 2000 (-1.0%) and S&P Mid Cap 400 (-1.1%) underperformed after surging yesterday on bolstered rate cut expectations. 

Looking ahead, attention now turns squarely to next week's FOMC meeting. A 25-basis point rate cut is fully priced in, but the updated dot plot and Fed Chair Powell's press conference will put the market's expectations of three total rate cuts by year-end to the test. 

U.S. Treasuries retreated on Friday with longer tenors leading the slide, though even with today's underperformance, 10s and 30s added to their gains from the first week of September while 5s and shorter tenors finished the week in negative territory. The 2-year note yield settled up three basis points to 3.56% (+5 basis points this week) and the 10-year note yield settled up five basis points to 4.06% (-3 basis points this week).

• Nasdaq Composite: +14.7% YTD
• S&P 500: +12.0% YTD
• DJIA: +7.7% YTD
• Russell 2000: +7.5% YTD
• S&P Mid Cap 400: +5.2% YTD

Reviewing today's data:

• The preliminary University of Michigan Consumer Sentiment reading for September checked in at 55.4 (Briefing.com consensus: 59.2) versus the final reading of 58.2 for August. In the same period a year ago, the index stood at 70.1.
  • The key takeaway from the report is that the pullback in consumer sentiment was paced by fading economic views among lower-income and middle-income consumers.