August 20th Market Overview

Happy Tuesday everyone, a ton of commentary from various big name analysts today…specifically hyping the tech sector.

I like to pay attention to market breadth on these kind of cool off days after a greats run of momentum. Its always interesting to see what sectors hold green while most sectors go red.

Lets dig in…

Executive Summary

• S&P 500 and Nasdaq poised to snap 8-day winning streaks, signaling a potential shift in market momentum.

• Federal Reserve speculation intensifies ahead of Jackson Hole Symposium and release of July meeting minutes.

• Tech sector shows mixed signals with Palo Alto Networks surging 8% post-earnings while other tech giants receive positive analyst coverage.

• Looking ahead, market participants should watch for potential volatility as policy decisions and earnings reports continue to shape the landscape.

Market Overview

We’re seeing a pause in the recent rally today, with major indices hovering near the flatline. As of 1 PM ET, the S&P 500 is down 0.1% at 4,534, the Nasdaq has shed 0.1% to 14,240, and the Dow has slipped 0.2% to 35,320. This session breaks the momentum of the past eight trading days.

Key Market Drivers

1. Federal Reserve Anticipation: Traders are eagerly awaiting signals from the Fed regarding potential September rate cuts, with the Jackson Hole symposium as a key focal point.

2. Earnings Impact: Palo Alto Networks’ stellar performance contrasts with headwinds faced by Lowe’s and Bank of America, highlighting the divergent trajectories within the market.

3. Wall Street Ratings: A flurry of analyst upgrades and initiations, particularly in tech and energy sectors, is influencing investor sentiment.

4. Global Context: While U.S. markets take a breather, European stocks have shown modest gains, with the Stoxx 600 up 0.3%, potentially influencing global investor sentiment.

Stock Spotlight

• Palo Alto Networks (PANW): Surged over 8% following outstanding fiscal Q4 results and strong future guidance.

• Amer Sports (AG): Celebrated a 10% increase after beating revenue expectations and raising full-year guidance.

• Lowe’s (LOW): Dipped more than 1% due to revenue underperformance and lowered profit outlook.

• Bank of America (BAC): Fell over 2% as Berkshire Hathaway continued to reduce its stake.

• MediaAlpha (MAX): Received a buy rating initiation from Goldman Sachs with a $20 price target.

Other Magnificent 7 Updates

• Amazon (AMZN): JPMorgan reiterated it as a “Best Idea,” projecting significant e-commerce growth potential.

• Nvidia (NVDA): Morgan Stanley maintained its overweight rating, expecting positive results to boost the broader AI supply chain.

Other Notable Company News

• Eli Lilly (LLY): Named a top pick by Wells Fargo due to strong data and manufacturing capabilities.

• Mastercard (MA): JPMorgan designated it a top choice, citing expected guidance upside and increased revenue visibility.

• JPMorgan Chase (JPM): Approaching a potential record 11-day winning streak, though Daiwa downgraded it to outperform from buy.

Sector Watch

Bond Market

The 10-year Treasury yield has dipped 4 basis points to 3.824%, reflecting cautious sentiment ahead of key Federal Reserve events. JPMorgan’s Jay Barry suggests yields are likely to remain range-bound in the near term.

Policy Watch

All eyes are on the Federal Reserve’s annual Jackson Hole Economic Symposium, with Chair Jerome Powell’s speech on Friday as the main event. Additionally, Wednesday’s release of the July Fed meeting minutes could provide crucial insights into the central bank’s thinking on future rate decisions. These events have the potential to significantly impact market direction in the coming weeks.

- JB

Note: This newsletter is intended for informational purposes only.