Can Bulls Stay in Control Into Month-End?

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Our View

Because the markets had rallied so hard from the August 5th low, everyone seemingly thought the rug was going to be pulled out from underneath them on Friday after Powell’s 10 a.m. remarks. 

Instead, he delivered what investors had been hoping for: Certainty on whether the Fed would begin cutting interest rates. With rate cuts now in the bag, the S&P 500 is hovering within 1% of its all-time high. 

What’s not hovering near record highs though? The Nasdaq 100, which is still down 4.6% from its all-time high in July. Remember, that’s when the Great Rotation began, with the S&P continuing to new highs into mid-July after the Nasdaq had already topped out earlier in the month. 

Now the S&P 500 has recovered almost all of its losses, and while the Nasdaq hasn’t necessarily done bad, it’s clearly lagging. We’ll see if that’s still the case after Nvidia reports earnings on Wednesday after the close. Just like the S&P ahead of Powell, I wonder if too many people are expecting a pullback for Nvidia after the event, setting up more potential upside. 

If that’s the case, Nvidia could be the spark that the Nasdaq needs to regain momentum vs. the other indices.