To use an old Yogi-ism “it’s déjà vu all over again”. Last week AI optimism flipped to AI skepticism. In addition, the varying views on the Federal Reserve were on full display raising some questions about the path of monetary policy going forward. Equities pulled back throughout the week and it was an ugly start to the Friday session. The S&P 500 broke below its 50d ma for the first time since it was reclaimed in the aftermath of the Tariff Turmoil. However, the buy the dip impulse remained strong with traders defending key technical levels. The S&P 500 rallied nearly 1.5% off the session lows to finish the day around unchanged, keeping the streak of closes above the 50d intact. Major indices continued to move higher in the front half of the week with the S&P 500 trading all the way back up to ~6,850. However, amidst that rally there seemed to be a change in character in the market. The AI theme was under pressure again with some mixed headlines adding to growing concerns and the other thematic favs were unwinding in a fashion just as aggressive as they had gone up a couple of weeks ago. Investors seemed to be moving up the “quality” scale favoring large cap over small, value over growth and profits versus the promise of the future. This morning, just like last Friday, S&P futures were down >1% and crypto was breaking to fresh lows ahead of the open. Once again, the buy-the-dip bid emerged, for equities at least, and the S&P 500 rallied to end the session around flat. Healthcare and energy have now been the best two performing sectors in back-to-back weeks. Mega-cap, tech-heavy sectors underperformed this week, but despite the AI anxiety Tech managed to end the week slightly higher. For next week, Nvidia may generate some attention with its earnings report and major retailers will also publish important results. The federal government is reopened and major confirmed releases, like PCE, will happen the week of 11/24. The September monthly jobs report will be published on Thursday, however, giving us something to read in between updates to our Thanksgiving shopping list. Have a great weekend.

Expand article