Markets Gain on Fed Cut News, Small Caps and Regional Banks Bulls Win

Stay Informed and Stay Ahead: Market Watch, August 23rd, 2024.

Key Takeaways

Markets: DOW, S&P 500, and NASDAQ gain; VIX moderately volatile. Real Estate leads, Consumer Staples lags. Top industry: Automobiles.
Inflation: U.S. leading indicators fell 0.6%, jobless claims rose. Powell signaled a September rate cut.

Yields & Commodities: The 30-year bond yield fell 0.031% as prices rose, signaling a decrease in long-term rates. The 2-year note also declined. Crude oil rose 2.67% to $74.96; gold and silver gained. The Bloomberg Commodity Index was up 1.28%.
Crypto & ETFs: Bitcoin USD rose 5.14% to $63,987. Monero gained, while Litecoin and Ethereum Classic declined. ETF Gainers: Defiance Daily Target 1.75x Long MSTR ETF rose 20.75% ; Direxion Daily Regional Banks Bull 3X Shares up 15.22%.

Indices & Sectors Performance:

DOW, S&P 500, and NASDAQ rose. 8 of 11 sectors advanced, Real Estate leads, Consumer Staples lags. Automobiles (+4.50%), Passenger Airlines (+3.74%), and Semiconductor & Semiconductor Equipment (+3.59%) leading.

The Dow shows steady growth across all periods, with moderate short-term gains and substantial long-term increases. The index shows a strong upward trend, particularly over the 50-day (+6.36%) and 200-day (+20.76%) periods, reflecting sustained market strength. This suggests overall market confidence and resilience.

S&P 500 has a strong and consistent upward trend, with increasing gains over time. Short-term growth is moderate, but the long-term rise is significant, particularly with a 29.06% increase over 200 days. This reflects a robust market performance and positive investor sentiment.

The NASDAQ shows strong growth, especially over longer periods. While short-term gains are moderate, with a 1.40% increase over 5 days and 3.00% over 20 days, the index sees a significant 10.08% rise over 100 days and an impressive 32.24% gain over 200 days. Year-to-date, the NASDAQ is up 19.10%, reflecting a robust performance and strong market momentum.

Economic Highlights:

U.S. leading indicators fell by 0.6%. Initial jobless claims rose slightly. S&P services’ PMI improved, but manufacturing PMI declined. CPI held steady at 0.2%. Existing and new home sales rose. Powell signaled a September rate cut.

NASDAQ Global Market Update:

NASDAQ saw 5.01B shares traded with a 3.65 advance/decline ratio. NVIDIA and ProShares UltraPro Short ^SQQQ led actives.

US Treasuries & Bond Markets:

The 30-year bond yield fell by 0.031% as prices rose, indicating a slight decrease in long-term interest rates. Other Treasury yields also declined, with the 2-year note down 0.096%.

Market Factors:

Small and IPO stocks led gains: Small Cap Value +3.5%, IPOs +3.6%. Others were stable.

Volatility:

Commodities & ETFs:

Crude oil futures rose 2.67% to $74.96, while Brent crude was nearly unchanged. Gold and silver gained 1.27% and 2.82%, respectively. Natural gas and unleaded gasoline fell, with the Bloomberg Commodity Index up 1.28%. ETF Gainers: Defiance Daily Target 1.75x Long MSTR ETF rose 20.75%; Direxion Daily Regional Banks Bull 3X Shares up 15.22%.

Cryptocurrency & Currency:

Bitcoin USD rose 5.14% to $63,987. Other cryptocurrencies showed mixed results, with Monero gaining and Litecoin and Ethereum Classic declining.

Stocks:

Notable Earnings:

Global Markets Summary:

Asian indices: Japan’s Nikkei 225 up 0.40%, with minor gains for China’s Shanghai Composite and a slight decline for Hong Kong’s Hang Seng. European indices: CAC 40, DAX and FTSE 100 rise.

Focus on long-duration bonds with leveraged ETFs like ZROZ (PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF) and EDV (Vanguard Extended Duration Treasury Index ETF) to gain on potential rate cuts. Nasdaq/Tech and growth sectors show strong long-term potential. Diversify with Russell 2000 ETFs and bank index ETFs. Election years historically boost market performance. Top Small-Cap ETFs Poised to Benefit: Vanguard Small-Cap Growth ETF (VBK), iShares Russell 2000 Growth ETF (IWO), iShares S&P Small-Cap 600 Growth ETF (IJT).