NEWS

Record highs for S&P 500 and Nasdaq

The S&P 500 and Nasdaq continued their upward trajectory today, reaching new record highs. Despite a slow start in US equity futures, markets quickly regained momentum, driven by optimism and strong performance in key sectors. The lack of significant economic data today left investors focused on upcoming reports, including CPI and PPI figures later this week, which are expected to provide critical insights into inflation trends and potential Federal Reserve actions.

The Fear & Greed Index, currently at a neutral 54/100, reflects cautious sentiment among investors, contrasting sharply with last year's extreme greed levels. This cautious optimism is also reflected in sector performance, with Technology, Industrials, and Materials leading gains, while Communications and Energy sectors faced some pressure.

Anyhow, look below, these were the market close for the main indices and most fancy assets:

STOCKS

Small caps outperform

Today, small caps outperformed broader indices, with the Russell 2000 (IWM) showing a notable gain of 1.25%, compared to the S&P 500 (SPY) which edged up by 0.12% and Nasdaq (QQQ) remaining flat.

Among sectors, Technology (XLK) led the gains with a 0.55% increase, followed by Real Estate (XLRE) and Industrials (XLI). On the other hand, Communications (XLC) and Energy (XLE) sectors struggled, with declines of 0.90% and 0.77% respectively.

The ongoing disparity between growth and value stocks is noteworthy, with the growth-to-value ratio now at levels not seen since the dot-com bubble of March 2000. Large caps continue to significantly outperform small caps, marking the largest divergence since 1998, with large caps up 17% year-to-date compared to small caps down 2%.

However, caution is advised as only 17% of S&P 500 stocks have outperformed the index over the past month, indicating a more selective market environment. This figure is the lowest in at least a decade, suggesting that while indices are hitting highs, broader market participation is narrowing.

OTHER ASSETS

Gold falls sharply

In the commodities market, August gold futures retreated sharply by 1.43% to $2,363.50 per ounce amid increased risk appetite for equities and profit-taking. This decline was driven by expectations of a possible Fed rate cut as early as September, with upcoming CPI data crucial for further market direction.

Meanwhile, August WTI crude futures also saw declines, closing down 1% at $82.33 per barrel, as Hurricane Beryl had minimal impact on supply disruptions. Brent crude followed suit, falling 0.91% to $85.75 per barrel. Expectations of a balanced demand-supply scenario through the summer, coupled with potential output increases by OPEC+, are key factors influencing crude oil prices.

The Dollar Index (DXY) held steady above 105, indicating modest strength against major currencies. Notably, the Japanese yen showed weakness, declining 0.2% against the greenback. Treasury yields had a mixed session, awaiting further economic cues and Federal Reserve Chair Powell’s upcoming testimony.

FOLLOWING DAYS

Here is what to look for next

Looking ahead, investors will closely monitor this week’s CPI report for insights into inflation trends, which could sway the Fed's policy decisions and impact both equity markets and gold prices. A dovish CPI reading could serve as a catalyst for renewed interest in gold as a hedge against inflation.

Technically, equities ended the day with moderate gains but off their highs, reflecting cautious optimism among investors. With key economic data and Fed updates on the horizon, market participants remain vigilant for signals that could dictate the next phase of market movements.