Market at a Glance

Dow 53569.44 | S&P 7730.99 | NASDAQ 26541.35 | Russell 2K 3014.34 | NYSE 24649.03 | Value Line Arith 14328.98

Seasonal: Bearish. September is the worst performing month of the year for DJIA, S&P 500, NASDAQ (since 1971), Russell 1000 and Russell 2000 (since 1979). September’s rank improves modestly in midterm years going back to 1950, but average losses widen for DJIA (–1.2%), NASDAQ (–1.6%), Russell 1000 (–1.8%) and Russell 2000 (–1.6%). S&P 500’s average September loss in all years is unchanged at –0.8% in midterm years. DJIA has declined in 12 of the last 19 midterm-year Septembers.

Fundamental: Mixed. Despite the Atlanta Fed’s GDPNow model currently showing Q3 GDP estimated at 4.6%, Q2 GDP revised was just 1.5%, well below earlier estimates by the same model. Mixed economic growth has not caused inflation to slow as core CPI came in 3.4% higher than one year ago period. AI investment remains robust, but concerns about the spending spree remain. Employment data appears to be holding up, but the size of the U.S. labor force is falling and nonfarm payrolls declined by 23000 in July.

Technical: Breakout Fading. DJIA, S&P 500, and Russell 2000 closed at new all-time highs in August. NASDAQ has not. After the early August breakout all four indexes are back above their respective 50-day moving averages, but the gap has been narrowing, today notwithstanding. Current levels of support to watch are DJIA around 52500, S&P 500 near 7500, NASDAQ 26000, and Russell 2000 approaching 2990.

Monetary: 3.50 – 3.75%. To hike or not to hike. As of 4:30 pm EDT on August 27, the CME Group’s FedWatch Tool is showing odds that suggest no change in Fed funds target rate until at least their December 9, 2026, meeting where the odds reach 74.5%. The Fed may be on the sidelines until later this year, but the U.S. Treasury will be acting in September in an attempt to lower long-term Treasury bond yields by doubling its buyback program. Treasury will begin purchasing bonds of 10-year and longer duration on September 9 with at least $4 billion per operation. It remains to be seen what the real-world impact will be on bond yields and interest rates. We suspect it will likely be muted given the substantial dollar amount of bonds outstanding compared to the buyback amount.

Sentiment: Bulls Stretched. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 51.9%. Correction advisors are at 30.8%, and Bearish advisors were 17.3% as of their August 26 release. Two weeks ago, Bullish advisors peaked at 57.4%, their highest level since late February. Overall sentiment suggests the majority of funds marked for the market are already invested and little remains on the sideline. If that is the case, the market is likely still highly suspectable to headline risk especially the longer it takes NASDAQ to return to new all-time highs.