Happy holiday weekend everyone. Sure, Labor Day’s on Monday, but the real holiday is tomorrow. College football is finally back. (Go Buckeyes!) Let’s get you caught up so you can enjoy kickoff.
📊 Weekly Market Recap
- S&P 500 return Year-to-date were approximately 10.08%
- S&P 500 return over the past month were approximately 1.53%
- S&P 500 return over the past 7 days were approximately -0.10%
This Week in the Markets- 3 Things to know
- NVIDIA’s earnings jolt markets – The entirety of the tech market this week came from NVIDIA on Wednesday. Once again posted good results this week, but there were concerns. The numbers looked great on paper with continued AI demand, and solid guidance but the market’s reaction was less straightforward. Shares initially dropped, then gave back some gains as traders debated whether the stock’s future growth is already fully baked in due to their H20 chip absence in China. NVIDIA has become such a market heavyweight that every earnings print feels like a referendum on the entire tech sector.
- Valuations creeping higher – Speaking of valuations, the S&P’s PE ratio has been quietly inching up with each leg higher. (As a quick refresher: the price-to-earnings ratio basically tells us how expensive or cheap a stock is.) It’s not “panic mode” yet, but it’s definitely something to watch. Right now, a lot of the market’s gains are being driven by multiple expansion rather than true earnings growth, and that dynamic can only last so long. Investors are happy to pay up when they believe rates are coming down and growth is still intact, but if earnings stumble or inflation flares again, the stretched valuations could quickly become a drag. For now, markets are shrugging it off, but the pillow is loosing its fluff with each rally.
- Make it Or Break it- Today’s inflation landed right on target in July’s PCE report, and that’s got investors feeling good about a likely Fed rate cut in September. Core PCE crept up to 2.9% still sticky and above the Fed’s 2% target, but not alarming enough to spook the market. Headline inflation held at 2.6%, which helped keep the S&P hovering near record highs. The vibe is cautiously optimistic and traders are betting on a cut, but the rally feels a bit hesitant with tech cooling off. What happens next comes down to the upcoming jobs and inflation reports if those show continued cooling, the Fed has the green light and stocks could push higher. But if inflation pops again or the labor market runs hot, the rate-cut bets could unwind fast, leaving markets exposed to a sharp pullback.
——————
Powell’s softer tone at Jackson Hole last week was the kind of subtle shift markets had been waiting for, and it immediately sparked a rally heading into last weekend. After months of “higher for longer,” his acknowledgment that the labor market is cooling and inflation progress is real gave investors permission to believe a September cut is finally on the table. That might not sound like much, but tone alone can move the needle when the Fed has been so stubbornly hawkish. Treasuries quickly started baking in earlier easing, equities jumped, and suddenly risk appetite was back in style. The real takeaway is that the Fed looks more flexible now, and that leaves investors wondering not just if, but when Powell actually makes the first move. Every new data point on jobs, wages, or prices will now be scrutinized with September in mind, which means volatility is baked into the weeks ahead.
If Powell does follow through with even a modest 25-basis-point cut next month, the market reaction could be big especially for growth stocks and tech, where momentum traders have been waiting for confirmation that easier policy is around the corner. A cut in September would instantly flip the conversation from “when does the Fed ease?” to “Is this the right time and will there be another”. That’s fuel for another leg higher, but it also sets a high bar right before October earnings season. If companies fail to deliver strong guidance, stretched valuations could suddenly look fragile, and enthusiasm could fade as quickly as it built. On the flip side, if Powell holds off and sticks to his cautious script, markets may wobble but investors will likely treat any pullback as another buying opportunity as long as the broader macro story doesn’t unravel. Either way, September now feels like a make-or-break month (historically the most volatile month of the year), and how the Fed chooses to play it will likely set the tone for the rest of the year.
S&P 500 SECTOR SNAPSHOT- Past Month
Top Movers In the Market This Month
Lets review your Portfolio
At Shetland Wealth, we know that smart investing starts with understanding your unique comfort level with risk. That’s why we’ve partnered with Nitrogen®, the industry-leading platform for risk alignment, to give you a data-driven, personalized investing experience.
Enhance your financial journey by taking just a few moments to complete our comprehensive Risk Assessment Questionnaire—designed to help us understand your unique goals, time horizon, and comfort with market fluctuations.
ake the first step toward a portfolio that’s designed with you in mind. If you have any questions along the way, our dedicated advisors are just a click or call away—so you can move forward with confidence.
Tap here to set up your meeting today! We look forward to working with you!