Stocks and Bonds Little Changed in Light Trading Activity

Good morning, and welcome to September already.  Wow!  Where did the summer go?

The Dow (-0.2%), NASDAQ (-0.2%) and S&P 500 (-0.1%) each fell fractionally last week.  Conversely, taxable bonds and tax-free municipal bonds gained about 0.2%.  The 10-year Treasury yield fell 0.04% to finish the week at 4.22%.

In light trading commensurate with the final week of summer, stocks and bonds finished close to the even mark.  The much-anticipated earnings report from Nvidia didn’t seem to excite investors, as the stock also fell about 2% for the week, despite strong earnings.  In other economic news, durable goods orders and jobless claims came in better than economists’ expectations, and the Fed-favored inflation gauge – Personal Consumption Expenditures (PCE) was in line with expectations.

The 2nd quarter earnings season is nearly complete, and profits surged far more than expected.  81% of companies reported earnings and revenue higher than expectations.  The overall earnings of the S&P 500 for the 2nd quarter were up 11.95%, compared to estimates of 9.23% at the beginning of the quarter.  The 2025 earnings growth estimate was raised to 10.72%, and 2026 estimates are now up to 13.29%.  These growth estimates are far greater than seen around most of the world.

Last week was more evidence that the stock market tends to follow rumors more than it follows the news.  Specifically, the markets continue to respond to tariff rumors, but far less than it did earlier in the year – maybe because it has become more ho-hum anymore.  More focus in the coming weeks will be on the Fed’s decision to raise, cut, or keep interest rates the same at its next meeting in two weeks.  It seems now that investors are expecting a 0.25% rate cut, even despite the strong labor market.  Likely, any stray from the 0.25% rate cut will have a big impact on the markets.

Have a great day and terrific week!

^{Source:  Yahoo Finance}

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^{The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.}