US STOCKS: Google Judgement Helps Stocks Pare Losses, Momentum Higher Stalling
The S&P(ESU5) overnight range was 6371.75 - 6472.50, SPX closed -0.69%, Asia is currently trading around 6433, +0.15%. The S&P looked in trouble at 1 point overnight, down around 1.70% and the move being led by its darling Nvidia, but demand returned sub 6400 and the news that Google will not be required to sell Chrome saw a solid bounce from the lows. We head into September which traditionally is the worst month for US Equity performance, will stocks continue to ignore seasonality like it did in August? This morning futures have opened a little higher following through with the Google news, E-minis +0.15%, NQU5 +0.25%. The market will be eyeing NFP on Friday, hoping for a catalyst to reignite momentum which looks to be stalling.
- Lance Roberts(RIA) - “Valuations are stretched, breadth remains narrow, and Fed policy is still subject to incoming data. To sustain momentum, markets will need more than AI enthusiasm; they will require broader sector participation, continued progress on inflation, and labor market data that cools without cracking. Investors should remain alert to the risk that stretched positioning meets seasonal headwinds in the weeks ahead.”
- (Bloomberg) - “US Stocks Drop as Tech Rout Deepens, Led by Downturn for Nvidia. Investors are also eying what’s historically been the weakest month for US stocks, with concerns including an unprecedented level of concentration in a handful of tech stocks, tariffs, and elevated economic uncertainty.”
- ISABELNET on X: "Equity - Systematic and discretionary positioning are diverging: systematic strategies remain bullish on equities driven by technical momentum, while discretionary investors stay cautious amid economic and geopolitical concerns" See Chart Below.
- Thomas Thornton on X: “I'm not sure how much fuel is left to power momentum higher with CTAs and vol control strategies in 100% percentile fully invested"
- zerohedge on X: Goldman: "NFP is the week’s main event. We are at 60k, below consensus. There is a seasonal August bias to miss: August payrolls have exhibited a consistent negative bias in initial prints over the last decade."
Fig 1: SPX(ESU5) 2H Chart
Source: MNI - Market News/Bloomberg Finance L.P
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FED: Trump To Announce Candidate To Replace Kugler In Next Few Days
US President Trump has stated that he will announce a candidate to replace Fed Governor Kugler in the next few days. Rtrs notes: "U.S. President Donald Trump said on Sunday he will announce a candidate to fill an open position at the Federal Reserve in the next couple of days. The Fed said on Friday that Governor Adriana Kugler was resigning early from her term, leaving an opening for Trump, a sharp critic of the U.S. central bank's leadership, to fill."
US TSYS: Cash Open
TYU5 is trading 112-10+, up 0-04 from its close.
- The US 2-year yield opens around 3.66%, down 0.02 from its close.
- The US 10-year yield opens around 4.206%, down 0.1 from its close.
- Daily Chartbook on X: "If not for collapsing labor force participation since April, unemployment would've climbed to 4.9% [yesterday] instead of 4.25%." @Econ_Parker. See Graph Below.
- Brian Sullivan on X: “Goldman Sachs notes that the recent 2 month job revisions were the largest outside recessionary times since … 1968. Goldman expects more large revisions next month.”
- MNI BRIEF: Fed Hammack: Jobs Bear Watching, Inflation To Rise. "Disappointing signs" in the July jobs report bear careful watching, but the U.S. labor market remains largely in balance, Federal Reserve Bank of Cleveland President Beth Hammack said Friday after Bureau of Labor Statistics data showed a sharp slowdown in hiring over the past few months. "It looks like a healthy labor market that's still well in balance, but with some disappointing signs that we should watch very carefully," she told Bloomberg Television.
- The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now looking to initially test the 4.10% area. The move was even more aggressive in the 2-year which has rejected the move back towards 4% and now looks to target the pivotal 3.50% area.
- Data/Events: Factory Orders, Durable Goods
Fig 1: US Unemployment
Source: MNI - Market News/@dailychartbook/Arch Capital
AUSTRALIA: June Consumption Growth Forecast To Rise
In a week of second tier data, the focus is likely to be on Tuesday’s June household spending data which will now replace retail sales, which had its last print last week. The Q2 chain volume measure is also out. Bloomberg consensus expects June consumption values to rise 0.8% m/m to be up 4.9% y/y after 4.2% in May. The ABS noted that discounting in the month had boosted June retail sales.
- Today, the July Melbourne Institute inflation gauge is released. It printed at 2.4% y/y in June above headline CPI at 1.9%.
- Tuesday sees the final services and composite S&P Global PMIs for July. The preliminary print saw a 2 point rise in the composite to 53.6 suggesting a pickup in growth at the start of Q3.
- June trade data are released on Thursday. The trade surplus is forecast to widen to $3.25bn from $2.24bn.
- In terms of the RBA, Head of Payments Policy Connolly participates in a panel at the ACCC/AER regulatory conference at 1045 AEST on Thursday.
