Is the Market Approaching a Short-Term Top?
Monday saw a strong rally that pushed markets to new all-time highs—only to be quickly reversed the next day, with selling pressure continuing through the rest of the week. While we're still trading near record levels, there are signs the market may be losing momentum.
The RSI has pulled back from overbought territory, and the MACD on the daily chart looks poised to trigger a sell signal. Could the beginning of a new quarter prompt a rotation out of equities and into bonds? Time will tell.
Economic data was relatively light this week, with the highlight being the PCE Deflator. As economists have become adept at forecasting this metric based on CPI and PPI data, there were few surprises. The monthly headline number came in 0.15% above consensus but remained in line on a year-over-year basis at 2.7%—up just 0.1% from last month. Core PCE held steady at 2.9%.
Second-quarter GDP was in line on a year-over-year basis at 2.5%, but the quarter-over-quarter figure surprised to the upside at 3.8%. Jobless claims continued their downward trend, another encouraging sign for the labor market.
Perhaps the biggest surprise of the week came from housing. Did anticipation of Fed rate cuts boost demand? New home sales surged to their highest level since January 2022. Existing home sales and housing permits also beat expectations. If this strength continues, it could become a meaningful tailwind for the U.S. economy.
📅 Looking Ahead: Key Economic Data Releases
Next week, the data calendar heats up considerably:
Monday: Pending Home Sales
Tuesday: Job Openings (JOLTS)
Wednesday: ADP Employment Report & ISM Manufacturing Index
Thursday: Weekly Jobless Claims & Durable Goods Orders
Friday: Non-Farm Payrolls & ISM Services Index
Consensus estimates point to 45,000 jobs added in the upcoming Non-Farm Payrolls report—a modest improvement over last month, but still indicative of a labor market that has largely stalled.
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📌 Disclaimer:
The opinions expressed in this material are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Economic forecasts are not guaranteed and may not unfold as predicted.