1 minute market report 31 August 2024

1 minute market report 31 August 2024

In this short market report, we look at the various asset classes, sectors, share classes, exchange-traded funds (ETFs) and stocks that have supported the market and the market segments that have defied the trend by falling.

Identifying strengths and weaknesses allows us to see the direction of significant cash flows and their origin.

The recoil continues

The S&P 500 took a serious hit in early August, but has rebounded nicely since then. The immediate cause of the sell-off was the weak jobs report, which reignited recession fears. The last three weeks have been positive, bringing us back to within 0.3% of the all-time high. Here’s a look at the last 4 weeks.

A look at monthly returns.

This chart shows the monthly returns for the past year. August got off to a shaky start but finished solidly in the green. Note that pullbacks of around 5% are common during bull markets.

A look at July-August sales.

Here’s a closer look at the July-August decline using a discount chart. The biggest pullback so far has been 8.5% from the July 16 peak.

A look at the bull run since it began last October

This chart highlights the 57.9% gain in the S&P 500 from the October 2022 low through Friday’s close. We briefly dipped below the trend line and it looks like we may be headed for another record high this week.

Major asset class performance.

Here’s a look at the performance of the main asset classes, sorted by last week’s returns. We have also included returns from the October 12, 2022 low for additional context.

The top performer last week was Managed Futures. The worst performer was Blockchain. Bitcoin reached $71,000 on June 4 and has since fallen to $59,000.

Equity sector performance

For this report, I use the broad sectors as published by Zacks. They use 16 sectors rather than the standard 11. This gives us extra granularity as we analyze the winners and losers.

Financial stocks had a good week. Defense stocks outperformed as tensions rose in the Middle East. Retail stocks were the worst performing sector.

Performance of the stock group

For groups, I separate stocks in the S&P 1500 Composite Index by common characteristics such as growth, value, size, cyclical, defensive, and domestic vs. foreign.

The top group was large-cap value as investors moved away from growth names. The worst performer was Mag 7, down 1.6%.

S&P Mag 7

Here’s a look at the seven mega-cap stocks that have led the market over the past year. These seven stocks account for 53% of the total YTD gain in the S&P 500. That’s down from 87% earlier in the year, providing evidence that participation in the bull market is expanding. Tesla was the big winner while Microsoft struggled.

The dominance of the S&P Top 7 is fading

Last week’s top 10 ETFs

Carbon credits and home construction rose last week.

Last week’s 10 worst-performing ETFs

Cannabis growers and traders have had another tough week. Oil prices retreated on Friday as investors weighed expectations for an OPEC+ supply increase starting in October, along with fading hopes for a significant US interest rate cut next month, after data showed that oil spending consumption are strong.

Last week’s top 10 stocks

Here are the 10 best performing stocks in the S&P 1500 last week. Emergent

Shares of Hain Celestial ( HAIN ) rose Friday after the packaged food company posted better-than-expected results in its fiscal fourth-quarter earnings report.

The 10 worst performing stocks of the past week

Here are the 10 worst performing stocks in the S&P 1500 last week.

SunPower ( OTC:SPWRQ ) seems headed for the dustbin.

Final thoughts

Investors continue to reduce their exposure to large-cap growth stocks such as Nvidia and use these funds to buy less expensive small- and mid-caps. The Great Rotation continues. Nvidia reported earnings after the bell on Wednesday and again beat its top and bottom line numbers, as well as providing higher guidance for the next quarter. Stock sold out. Why? Apparently, the “whispered” numbers were even higher than Nvidia announced. This supports my view that analysts and investors are too optimistic about the gains in the AI ​​space.

Meanwhile, the small-cap Russell 2000 index is rising and nearing a new record high. And the mid-cap S&P 400 has already hit a new high. So investors are shifting from fast-growing stocks to lower value pieces at more reasonable prices.

AI trading isn’t dead, it’s just resting as investors look to diversify their holdings. With interest rates set to drop later in September, I think the rally still has room to run.