Equities closed the week with a flourish as the Nasdaq responded to Thursdays decline by leading large cap. equities higher on Friday adding 1.47% while the S&P 500 was up 1.15%, the Dow gained 1.14% and the Russell 2000 surged 3.19% and nearing highs for the year.
At the sector level XLY, XLRE and XLK led, while defensive sectors XLU, XLP and XLV lagged on the day. We continue to track the $188 level on the XLY as a key threshold for establishing bullish reversal on the chart which remains just shy at $187.75
Interest rates were lower as the 2yr settled at 3.91% while the 10yr closed at 3.80%. The Bloomberg Commodities Index ticked higher to 96.42 while Crude remained flat at $73.02 on the nearby WTI contract.
Ex-US, EAFE equities gained on Friday while EM equities weakened, neither looks likely to supplant US equities as durable leadership during this bull cycle. We would bet that international stocks would only become a haven if US rates began to rise necessitating some back-tracking from the Fed. As things stand with resilient earnings and the Fed. signaling cuts in into year end, we continue to prefer the domestic equity market.
There are no economic or earnings releases on the calendar for Monday, though NVDA is set to report after the bell on Wednesday as a potential market moving event this week.
Eco Data Releases | Monday August 26th, 2024
No Scheduled Releases
S&P 500 Constituent Earnings Announcements by GICS Sector | Monday August 26th, 2024
No S&P 500 Constituents Report
Momentum Monday
NVDA has been arguably the most important stock since the current bull market got underway in 2023. We took a look at the S&P 500, the Discretionary Sector and TSLA in our weekly market letter. Let’s use the same lens on NVDA for our weekly momentum section. From here we see margins expanding rapidly and forward earnings estimates projecting 50% growth over trailing earnings. Total Debt to Equity has decreased for NVDA, but interest expenses have risen dramatically relative to EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization). Valued at near 50x earnings, this company is priced for perfection. The only caveat we see on a chart like this is co.’s like this can become victims of their own success.
Any offsides on earnings is likely an accumulation opportunity over the intermediate to long term.
Data sourced from FactSet Data Systems
