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Traders Eye S&P’s Worst Month As Curtain Closes On Wild August
In with a roar, out with a whimper.
That was August. A month that began with the worst crash for Japanese equities since 1987 and a record-setting bout of volatility ended with US shares near enough to record highs and the VIX sitting with a 15-handle. Like it never happened.
Headed into the holiday weekend, US stocks were on track for a fourth straight monthly gain and, more notably, the ninth in 10. This is the never-ending story.
The rally that began with Janet Yellen cutting the US borr
I’ve thought September (and October) are iffy months because, as 3Q limps underwhelmingly to a close, companies run out of room to sustain their full-year guidance with ever more back-loaded quarterly guides.
This year, 1Q and 2Q earnings came in fine (except for the Megas) and each time, estimates were trimmed less than usual. S&P 500 2024 consensus is stable and 2025 is rising. We all survived NVDA.
Economic data is coming in pretty okay, wealth gap considerations aside, and we may be in a “good news is good, bad news is good” phase. Any dip from a 25-not-50 bp September rate will be bought, I think. Election uncertainty remains high but arguably isn’t getting higher. Israel-Iran-Hezbollah hostilities have been telegraphed for months, if it somehow still surprises, that dip also seems primed to be bought. Somehow I think Xi deigning to meet a mere flunky from the US might hint at some toning down of tensions. S&P 500 looks extended with valuation back to highs, and it is not the Megas driving that, but mid and small continue to look relatively cheap-ish.
2- and 10-year action the last two days signaling a .25bps cut in September, which seems appropriate, given that the job market is holding up and the economy is humming along. A Harris victory in November also will be good for animal spirits and assets in general.