Jay Woods:
Good morning. I'm Jay Woods, chief global strategist at Freedom Capital Markets and long-term member of the New York Stock Exchange. I'm filling in for the great Michael Reinking this week. You are listening to the Market Storylines Podcast on the Inside the Icehouse Podcast feed. We'd like to thank everyone for all the positive feedback we received two episodes in now. Don't worry, Michael will be back, well-rested after this new episode next week. But for now, please sit back as I take the reins this Thursday afternoon. Let's get ready to talk about some of this week's storylines and some of the storylines we're watching for next week.
So what are some of the storylines we are watching this week? Well, it's tough as we tape this on Thursday. The biggest storyline will be Jay Powell speaking at the Jackson Hole Symposium, but he already made news as the Fed Minutes were released on Wednesday and all eyes of the traders of the floor of the New York Stock Exchange are focused on what he says next. The Fed Minutes gave us a little peek behind the curtain. We are probably going to get that 25 basis point rate cut. Could we get 50? That's what traders are going to want to focus on as we head into that September 18th meeting. The Fed also told us unemployment was something they were watching and we got jobless claims data that shows that the labor market continues to soften and that dual mandate that the Fed watches ever so closely. Dual mandate being, one, inflation, two unemployment, that it is now time to finally make that pivot.
Inflation, as we saw in the Fed Minutes, they liked the numbers, they liked the trajectory they are seeing going towards that 2% mandate. Now it's unemployment. Unfortunately those unemployment numbers came out two days after their last meeting and we saw volatility ensue as they got a 4.3% unemployment rating versus an expected 4.1. So what will happen next week, we're going to find out, but one thing is for sure volatility, it may be back. We are in the crazy months of August and September. Those two months over the last three years have been negative. Will we break that streak? Well, right now, August is teeter tottering on break even, September the most volatile market month of the year, let's see how that unwinds. Can we break that streak? There are going to be a lot of headlines that we're focused on. Right now this week, the storylines, not only the Fed Minutes, but the jobs numbers.
We had a revision of jobs numbers that surprise the street. Market didn't really react to that number, but what it did say to the market was this upward revision is basically telling us we are going to cut on September 18th. As far as that volatility, it will continue to be a story to watch going forward. On August 5th, we saw the VIX spike to above 60. It was the third-highest rating in the VIX in its history. Let's put that in perspective. We had Covid, we had the financial crisis and we had the Japanese yen trade on Monday, August 5th, bigger than 9/11. When you get a shock to the market like this, there tend to be aftershocks. So keep an eye on the headlines. Geopolitical risk continue to be monitored closely, whether it's Russia, Ukraine, Israel and Iran. And then the election cycle, we're going to get some crazy headlines and markets tend to be jittery after you see a run in the VIX.
So keep an eye on volatility. But despite that, we had a streak where we were up nine out of 10 days in the S&P 500. The market has been very resilient. We are now at that inflection point as we've gotten through earnings season, 95% of the S&P 500 has reported. We still have one big one to go this week in stock Nvidia, which is in the NYSE FANG plus index. So you're going to see that possibly be extremely active next week. So keep an eye on that and the semiconductors because that leads technology, that leads the semiconductor industry. So watch for that as that comes out next week. As far as earnings, the story was earnings growth. We saw earnings that continue to exceed expectations at an above-average pace. 81% of the stocks that reported did meet or beat EPS estimates. Revenue growth continued on an average trajectory and it's all steam ahead.
What we have seen, rotation in this market. When we talk about perspective, we want to talk about leadership. We're not seeing the normal sectors lead. We're not seeing technology consumer discretionary lead. What led over the last four weeks, consumer staples, utilities, the broadening out. The equal-weighted S&P 500 is leading those magnificent seven stocks. This is positive in a particular bull market. It's not going to make all the great headlines. You don't see those big name big market cap stocks leading, but the broadening out shows that the market has been resilient. The market has shown strength. We saw great market strength in some of the retail names. Walmart two weeks ago reporting the consumer is still spending. Are they pulling back? Maybe, but it's not affecting their bottom line. Target. Target came out with impressive earnings last week. The stock has finally broken that downtrend and is showing some resiliency.
So when the retailers are out there shopping, this bodes well for the market. So we have earnings growth, we have volatility to be aware of, and then we have seasonal factors. I mentioned August, September, continue to be rough months. September, well, we have a week to go in August, let's see how we close out. But September has been over the last 20 years, the worst performing month. Why? There are a lot of people that have ideas as to why. It's the end of the quarter. People rebalance, reshuffling. People coming back from the shore, coming back from the Hamptons, getting a little more activity, reassessing things, selling some of those losers, getting ready to get into that last stretch. And I know Michael's going to talk a lot about this as we head into September, but that last quarter of the year, historically the best quarter of the year.
In an election cycle year after the election, we get certainty regardless of the outcome and you see the market rally. 2016, we had a kind of controversial election. Guess what happened after election day? We rallied into the end of the year. 2020, controversial election. We rallied into the end of the year making new highs all the way through January. So I expect, given the trends, given the trajectory of this market, given the broadening out, now that we're through earning season, we're going to see some volatility, some headlines that will drive this market. But overall, the bull market continues as earnings growth continues, and we're going to get through this election season and finish the year off strong.
So as far as next week goes, we're going to be digesting that press conference in Jackson Hole. Getting ready for that September 8th meeting with the Fed. Is this buy the rumor, sell the news kind of event? That market has rallied tremendously off of that August 5th low. We'll see. We're at a very key inflection point and it's going to be interesting to watch the tape, expect volatility, expect things to move, but overall the trends remain the same. We're going to focus on the last of the earnings season and then watch the headlines as we head into that September 18th meeting. A lot of Fed speakers out there want to hear what their take is. Will we cut 25 basis points? Will we cut 50? How deep will these cuts be? What urgency do we see?
So that's what we're watching going into this last week of August, the last week of summer. As I previously mentioned, Michael will be back next week. Was an honor to fill in for Michael and join the Inside the Ice House Podcast family. I want to thank you for spending some time with me today. Remember to tune in every Friday to Market Storylines Podcast here on Inside the Ice House Feed and rate review and subscribe wherever you get your podcast. I'm Jay Woods, and we will talk to you again next week.
Speaker 2:
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