Good evening. The S&P 500 ended the week up 1.4%, this way setting a new record high. Yes, the Fed finally delivered what markets have been hoping for and anticipating over the past two years, which you’ll be reading more about below. Here are the top stocks to watch this week and what’s moving the markets.

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Top Stocks & Setups To Watch This Week

• $MCD
Break above 298.74 🎯 302.39 & 307
• $META
Break above 564.50 🎯 575.44 & 590
• $MU
Break above 93.88 🎯 98.91 & 102.85
• $AMD
Break above 162.04 🎯 169.80 & 177.55
• $SQ
Break below 65.78 🎯 63.67 & 61.83
• $PLTR
Break above 37.79 🎯 39.58 & 41

KV’s S&P 500 Levels

Weekly Market Recap

Fed Rate Cut

Last week, the Fed cut interest rates by 0.5%, marking the start of an anticipated easing cycle. This larger-than-expected cut follows a prolonged tightening period, as inflation dropped and unemployment rose slightly. While not a response to recessionary conditions, the move is intended to sustain economic growth. The Fed’s focus has shifted from inflation to employment, aiming for a soft landing while continuing to lower rates.

Positive Economic Outlook

This preemptive cut supports a more favorable economic outlook, with the Fed signaling more rate cuts to come. Key economic indicators, such as resilient consumer spending, low jobless claims, and rising household wealth, point to a positive environment. While the labor market is softening, conditions remain far from recessionary, making the case for a soft landing. The Fed’s gradual rate cuts should help keep the economy on track for moderate growth in 2025.

Market Opportunities Ahead

For markets, the Fed’s rate cuts have historically been positive when not paired with a recession. Equities typically perform well after such cuts, but given current elevated valuations, gains may be more modest this time. Meanwhile, sectors like real estate and financials may benefit most from lower rates. In fixed income, extending maturity profiles in bonds could help investors manage reinvestment risk as interest rates decline further.

Coming Up…

Important economic releases this week include a read on consumer confidence and PCE inflation data. On the earnings front, Micron and Costco are expected to report this week.

Key Headlines We’ve Been Reading

This is what’s caught our eye over the past 7 days.

• US crackdown on cheap Chinese goods adds to Temu, Shein woes.
• UK home asking prices rise sharply in September.
• Steve Cohen stops trading for hedge fund Point72.
• BlackRock shakes up private credit to chase industry leaders.
• Canada's Trudeau faces setback as party loses crucial Montreal election.

Trading Rule Of The Week

That was it for this week!

Stay safe,
KV 👋

Week #39 | September 22, 2024

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