The Market Brief
U.S. futures edged higher early Friday after upbeat forecasts from Apple and Amazon helped steady investor sentiment, a day after the indexes logged their steepest drop in more than three weeks.
Macro Viewpoint
The tech-heavy Nasdaq appears set for its seventh straight monthly gain, marking its longest winning streak since May 2017. Meanwhile, the S&P 500 and the Dow are on track for their sixth consecutive monthly rise.
Stocks rallied earlier this month on hopes of faster rate cuts from the Federal Reserve, but investors are now digesting a more cautious message from the central bank. The Fed delivered a widely anticipated quarter-point reduction, yet signaled that another cut in December was not a “foregone conclusion.”
That caution led traders to scale back expectations for a third rate cut this year. Futures markets now assign a 68.8% probability to another quarter-point reduction in December, down from nearly 90% just days earlier.
Prime Intelligence
Yesterday, we talked about “max concentration” over the past several sessions, as market breadth on the rally collapsed further into just a few stocks holding up the entire market.
To further contextualize our observation, the chart below shows that the past 5-day rally in the SPX (through Wednesday’s close) was almost entirely driven by the returns of three stocks.
Large-cap tech is everything right now, and you got a taste yesterday of what any disappointing results in terms of data or earnings can do to a market that is this concentrated.
📰 In today’s brief, we answer the question: what’s next for this market?
This is a FREE edition of the Market Brief. Join our daily institutional research and gain access to data-driven insights by becoming a subscriber 👇
