Weekly Market Review & Analysis For August 29, 2022

Market this week saw the end of August as well as the beginning of September. They were pretty much the same - in other words, neither was good.

The stock market fell from Monday thru Wednesday. The S&P 500 ended August with a loss of 4.2%. Nasdaq Composite closed August with a 4.6% decline and was also down for three consecutive days.

The S&P 500 market was marginally better than the Dow Jones index, but the heavy-tech-oriented Nasdaq extended its losing streak to six sessions on Friday after Nord Stream 1's pipeline news. The fallout from the August employment report, weaker than July's, impeded a rebound effort.

In addition, there was a growing belief within the market that the Fed could be forced to adopt a more aggressive rate-hike policy at its September rendezvous.

The market's major indices suffered between 3.0 and 4.7% losses for the week's trading session. This was the third consecutive week of losses. The S&P 500, at a high of 4325 on August 16th, was within a hair's breaking the 3900 before a closing week at 3924.

Much of the market selling interest resulted from a fear of Fed policy reinforced by Fed Chair Powell's Jackson Hole speech. The FOMC voter, Cleveland Fed President Mester, stoked the fear by acknowledging that she believes the fed funds rate should be slightly higher than 4% by next year. She also stated that she doesn't anticipate a rate reduction next year.

This understanding has once again contributed to a market inclination to sell into strength present this week along with rising U.S. Treasury yields as the Japanese Yen reached a 24-year low against the U.S. Dollar and the Eurodollar fell below 1.0 parity. The U.S. Treasury Two-year note yield fell one basis point to close at 3.4%, while the Ten-year note yield rose 16 basis points to close the week at 3.2%.

Market action

There were a lot of market growth concerns in the mix. Copper futures dropped 7.9% to $3.40/lb this week, while crude oil futures fell 6.4%, closing at $87.09. Demand concerns, which percolated after the Chinese city Chengdu (22 million inhabitants) was imprisoned for Covid testing, partly drove them lower. Nevertheless, this week, the materials sector lost -5.0%, and information technology, with a -5.0% drop, were the worst performing sectors.

This was due to market losses in mega-cap components and a poor showing from semiconductor stocks. The news that the U.S. government had informed NVIDIA that it would impose a new license requirement on sales of its H100 and A100 chips to China and Russia caused the latter to fall by 7.1%. In the process, the Philadelphia Semiconductor Index fell 7.1%.

The week ended lower for all eleven S&P 500 market sectors, with losses of between 1.6% and 5.0%. The industries that focus on defensive-oriented utilities were the best performing. The most significant impact on growth stocks was the increase in long-term rates. However, value stocks saw some selling. The Russell 3000 Value Index lost 3.0%, while The Russell 3000 Growth Index fell 4.0%.

Gold market prices retested July's crucial key support of 1996. Swiss exports surged, and OPEC had been on the Gold buy-side for years. This test will result in more central bank demand for Gold in September than in July/August. "Gold's price never rises." Gold metal has stable purchasing power, being a great commodity and asset.

What does this mean for investors? Trade Selecter reminds its readers that we play the long-term game in this market. We don't know what stocks will do tomorrow or next week, nor can we guess about tomorrow's inflation - we can leave that to the ''Experts''.

Instead, we try to connect the dots to understand what's going on. We pay attention to the market's Main Trend, the deep underwater tide that will lift our boats for decades. It also means being aware of recession risks and how severe and long-lasting any economic weakness might be.

We remind our Dear readers of the Trade Selecter motto that a market correction is equal to and the opposite of the claptrap it preceded. This alone should make the Main (Primary) Trend in development one to keep for the record books.

Reminder: U.S. market(s) will close Monday, the Labor Day holiday.

Market summary

INDEX:         STARTED WEEK        ENDED WEEK       CHANGE       %CHANGE       YTD%

DJIA:                  32283.40                      31318.44             -964.96              -3.0             -13.8

Nasdaq:             12141.71                      11630.86              -510.85              -4.2             -25.7

S&P 500:            4057.66                         3924.26              -133.40              -3.3             -17.7

Russell 2000:     1899.83                         1809.75                -90.08               -4.7            -19.4

This article was printed from TradingSig.com

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