This week’s inflation numbers gave investors a reason to think the Federal Reserve might pause its rate hikes in September. For now, a pause looks more likely than another increase.
The ProShares Inflation Expectations ETF (RINF) slipped a little, supporting the idea that inflation expectations are staying low.
Stocks Finish Strong
U.S. equities moved higher. The S&P 500 and the S&P 400 Mid‑Cap Index closed at new record levels. After six days of trading in a tight range, the S&P 500 finally broke out and now sits above 7,780. The next easy target could be 8,000.
More stocks are going up than down, and over half of the index members are trading above their 20‑day simple moving averages.
Even the equal‑weight versions of the indexes joined the rally. Both the S&P 500 Equal‑Weighted Index and the Nasdaq 100 Equal‑Weighted Index closed at record highs, with the latter beating the regular Nasdaq 100 by about 0.8%.
Big‑cap tech names helped lift the market, but the strength was not limited to tech. Communication Services, Real Estate, and Consumer Staples were the three best‑performing sectors on Thursday. Companies like Meta Platforms and Netflix boosted Communication Services, while cooler inflation helped Real Estate.
The 10‑Year U.S. Treasury Yield fell 0.88% and ended near its 21‑day exponential moving average. Yields have been making lower highs, but a series of lower lows is still needed to confirm a true downtrend.
Several key industry groups also joined the rally, including transportation, homebuilders, regional banks, and retailers. Overall, it was a bullish day for stocks with low volatility and upbeat sentiment.
Applied Materials reported earnings after the market closed and beat expectations on both profit and revenue. The stock fell in after‑hours trading.
Crude Oil Keeps Dropping
Crude oil prices kept sliding, mainly because demand looks softer. Uncertainty over U.S.–Iran talks about reopening the Strait of Hormuz added extra pressure.
Precious Metals Lose Some Shine
With inflation worries easing, demand for traditional inflation hedges like gold and silver has softened. Gold slipped from the $4,400 per ounce area.
The Bottom Line
As the second week of August ends, the major indexes look set for another solid finish. There are no major red flags in the market right now. Breadth is healthy, more stocks are joining the rally, volatility stays low, and the overall trend remains bullish.
Keeping an eye on market breadth and sentiment can help you stay aligned with the trend. Until clear signs of a slowdown appear, there’s little reason to fight the upward move.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always consider your own financial situation and consult a professional before making decisions.
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