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Market Recap
WEEK OF AUG. 28 THROUGH SEP. 1, 2023
The S&P 500 moved in a positive direction for the second consecutive week helping to pair some of the losses from earlier in the month. All of the major US stock indices ended the week with a broad rally, fueled by investors’ optimism regarding jobs data that signaled the Federal Reserve is close to ending its tightening cycle. The S&P 500 ended Friday's session at 4,515.77, up from the previous week's close of 4,405.71.
Meanwhile, Bitcoin fell after the US Securities and Exchange Commission once again postponed its decision on approving the first US ETF that would invest directly in Bitcoin. Despite expectations, the regulator deferred on filings from Bitwise, VanEck, Invesco, Valkyrie and WisdomTree, and especially from Blackrock, which spot-Bitcoin ETF was previously thought of almost as a ‘done deal’.
Global stock markets also turned to “risk-on” mode, a situation where investors prefer risky assets. An uptick in China’s manufacturing activity became the bright spot for Asian stock markets.
The U.S. statistics were perceived by investors with a ‘bad news is good news’ approach as slower economic growth in Q2 and a cooling job market pave the way for a ‘soft-landing’. Meanwhile, the stubborn euro-area inflation has raised concerns of stagflation.
According to data from the CME Group, the likelihood of a rate hike at the Fed meeting on September 20 plunged to 6% — almost three times lower than the 20% figure from the previous week – after the batch of economic reports pointed to a moderation in the growth of the US economy, almost cementing bets that the Federal Reserve is approaching the end of its interest-rate hikes.
The trajectory of future Fed rates, as anticipated by investors, points towards steady rates until next May. Just a week ago, the beginning of monetary easing was expected to commence in June with the probability of a rate hike in November standing at 55%.
Throughout the week, the situation with companies reporting was neutral for the broad market – the earnings per share (EPS) data were better than the average figures of previous years but slightly worse than a week ago, and forecasted earnings were again revised upwards.
