Get Ready for a “September Rally” for Stocks

Equities surged this morning as they washed away the gloom that shrouded August for most of the month.

The S&P 500 caught some tailwinds, ascending 0.7%, while its blue-chip comrade, the Dow Jones, put on a more modest show, rising 0.4%. All this after job openings dropped below the 9 million mark, a level not seen since March of the prior year. Meanwhile, the tech-heavy Nasdaq Composite sprinted forward with a 1.1% gain, outperforming.

Earlier, the S&P Case-Shiller U.S. National Composite Home Price Index reported a 0.7% uptick in June, reaching just a hair’s breadth away from its all-time peak set exactly one year ago.

But fasten those seat belts; the real market rollercoasters, the key PCE deflator – the Fed’s favorite inflation gauge – and the August jobs report, are queued up for the end of the week. Last week’s cautiously worded speech by Fed Chair Jerome Powell at Jackson Hole left more than a few on Wall Street skeptical. Can one really rule out further interest-rate hikes aimed at dampening inflation? Time will tell.

In the crypto universe, things got electric—almost Tesla-like—but not quite. A court ruling just turned the tables on the Securities and Exchange Commission, greenlighting the U.S.’s first Bitcoin ETF. Grayscale Investments can now finally uncork that champagne.

“The Commission failed to adequately explain why it approved the listing of two bitcoin futures ETPs but not Grayscale’s proposed bitcoin ETP,” the court said.

“In the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”

Bitcoin itself leaped 5%, while Coinbase, Riot Platforms, and Marathon Digital Holdings didn’t just walk but sprinted forward, with gains exceeding 15%.

Consumer confidence, on the other hand, did an about-face. After rising steadily through the balmy months of June and July, the Conference Board’s index dropped to 106.1 in August. A little refresher for those wondering – economists had anticipated a level of 116.

“August’s disappointing headline number reflected dips in both the current conditions and expectations indexes,” said Conference Board chief economist Dana Peterson.

“Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular.”

She continued, adding:

“Assessments of the present situation dipped in August on receding optimism around employment conditions: fewer consumers said jobs are ‘plentiful’ and more said jobs are ‘hard to get.’ Hard data confirm that employment gains have slowed, overall wage increases are less generous compared to a year ago, and the average number of weeks of unemployment is ticking upward.”

That was corroborated by the latest Job Opening and Labor Turnover Survey (or JOLTS). A drop in job openings and a lower quits rate pointed to a cooling labor landscape.

Overall, it was yet another bullish morning albeit significantly more so than the past two sessions. Wall Street seems to be on board with a recovery, too.

“A key difference to a month ago is that our short-term sentiment and positioning index is now way off contrarian sell territory and much more neutral now,” said HSBC chief strategist Max Kettner in a note this morning.

“So we think this presents a pretty good tactical entry point into risk assets, above all into US equities.”

Today’s burst also likely confirmed that the broader market has entered a short-term bullish continuation following the August selloff, which may even see stocks notch new highs in September, a seasonally weak month.


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