August 8th Market Overview

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Happy Thursday everyone.

Green across the board, the volatility we are seeing right now is insane.

Lets dig in…

Executive Summary

1. Stocks Surge: Major U.S. indexes rallied, with the S&P 500 gaining 2.2%, its largest daily increase since February 2023.

2. Labor Market Strength: Weekly jobless claims fell to 233,000, below expectations, boosting confidence in the U.S. economy.

3. Tech and Pharma Spotlight: Technology and healthcare sectors led gains, with Eli Lilly and Nvidia showing significant strength.

4. Market Volatility: Analysts suggest the “great moderation” era has ended, with increased volatility becoming the new normal.

Market Overview

The S&P 500 advanced 2.2%, marking its largest daily gain since February 2023. The Dow climbed 627 points (1.6%), while the Nasdaq Composite jumped 2.7%. This rally helped erase much of the losses from earlier in the week, though major averages remain slightly lower week-to-date.

Key Market Drivers

1. Labor Market Data: Weekly jobless claims came in at 233,000, below the forecast of 240,000, alleviating concerns about the job market.

2. Earnings Beats: Several companies, notably Eli Lilly, reported better-than-expected earnings.

3. Tech Rebound: Momentum names that suffered earlier in the week bouncing back back strongly.

4. Sector Leadership: Information technology led the sectors, rising 3.5%, followed by solid performances in healthcare, industrials, and consumer discretionary.

Stock Spotlight

Eli Lilly (LLY)

Surged over 8% after beating earnings expectations and raising its full-year outlook by $3 billion on strong demand for its diabetes treatment Mounjaro and weight loss injection Zepbound.

Nvidia (NVDA) & Broadcom (AVGO)

Both chipmakers jumped over 6% as part of the broader tech rebound, showcasing strong resilience after a tough start to the week.

Under Armour (UAA)

Soared 19%, heading for its best day since 2018, after beating Q1 expectations and adjusting its full-year profit guidance.

Monster Beverage (MNST)

Headed for its worst day since March 2018, dropping more than 11% after missing earnings expectations.

Warner Bros. Discovery (WBD)

Shares sank 12% after reporting a wider-than-expected loss and a $9.1 billion impairment charge on its TV networks business.

Other Magnificent 7 Updates

• Meta Platforms (META): Climbed 3.3%

• Apple (AAPL): Ticked up nearly 2%

• Alphabet (GOOGL): Increased by over 2%, continuing its positive momentum

Other Notable Company News

• Disney (DIS): The only Dow component tracking for losses, slipping about 0.6% in midday trading following Wednesday’s 4.5% drop after its earnings report. Going green into close… I love this for a long term hold with entries around $85 stops below $78.

• Restaurant Sales Struggle: Papa John’s reported a 3.6% decline in same-store sales, while Restaurant Brands saw smaller-than-expected growth, reflecting a cautious consumer base.

Sector Watch

Bond Market

The 10-year Treasury yield traded above 4% following the jobless claims data, returning to levels seen before last week’s disappointing July jobs report.

Policy Watch & Market Insights

• Piper Sandler suggests the labor market’s health may be overstated, indicating potential future headwinds.

• Strategas points to increased market volatility as the ‘great moderation’ period concludes, with sustained inflation and geopolitical tensions affecting stability.

• The Russell 2000's dramatic rise and fall in recent weeks has confirmed its recent breakout wasn’t real, according to Wolfe Research, suggesting more downside may be ahead for small caps.

• The iShares MSCI Momentum ETF (MTUM) rose more than 2%, showing signs of life in the momentum trade after three weeks of declines.

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Note: This newsletter is intended for informational purposes only.