The S&P 500 had a positive week, up 1.7% as it closed 6,664. Monday was a half day with the stock market open and the bond market closed for the holiday. The S&P 500 clawed back about half of the previous Fridays losses with its biggest one-day gain since May 27. Trump eased investor worries about growing trade tensions between China and the U.S. with a Sunday Truth Social post of Dont worry about China, it will all be fine. That sent tech stocks such as Oracle, AMD and Nvidia up broadly, leading the market higher with the tech-heavy Nasdaq 100 notching a more than 2% gain. On Tuesday the focus shifted to Fed Chair Powell as he signaled that the Fed is more worried about the job market than keeping prices stable, providing a signal that the central bank will likely cut its key interest rate twice more this year. At the close however, the S&P 500 lost 0.69%. Stocks saw choppy trading on Wednesday, but the S&P 500 clawed back Tuesday loss with a 0.68% gain as investors were encouraged by strong earnings from major banks. However, on Thursday the focus shifted from major to regional banks as Zions Bancorp (ZION) and Western Alliance Bancorp (WAL) both admitted to being victims of suspected fraud related to property loans, which seesawed the S&P 500 as it gave back about half of Wednesdays gain. Finally, on Friday investors seesawed back and tried to move past regional banks credit concerns. And, since we started the week with China news, why not finish the week off with more China news. In Friday afternoon Treasury Secretary Bessent said he would be speaking with his Chinese trade counterpart on Friday evening, and Trump also said that a meeting with China President Xi Jinping was still likely at the end of the month. As such the S&P 500 rallied into the close finishing the week at 6,664. On the technical side we saw a lot of seesaw halfway action this week as the S&P 500 has had six consecutive days of down and then up movement. We have also had five consecutive weeks of up and down action. And over those five weeks, the S&P 500 has been range bound between 6,550 and 6,764. And with Fridays close of 6,664, were pretty much at the mid-point of this consolidation period. And with consolidation you have a glass half full or half empty scenario, dependent upon which way it breaks out. While no one can predict the future, the half full scenario seems more likely. So lets focus on 29 October when we have the next Fed interest rate decision, which based upon the above tilts the scale to the cut side. Earnings season has just started, and the results have been encouraging. We get Teslas report next Wednesday and then Microsoft, Meta and Alphabet on 29 October, followed by Apple and Amazon the next day. In the meantime, hopefully the government shutdown will be settled by the 29th. As such, we could get more of this seesaw action leading up the 29th, but the probability leans towards a glass half full scenario and a possible bull run into year end. For TSP TIPS the Composite Scores of the C, S and I funds remain similar to last week and the Performance Ranking of the three has narrowed to less than 1%. As such we recommend no changes to our current investment mixes, and hopefully well see a clearer picture next week in anticipation of a month-end reallocation.
The S&P 500 had a positive week, up 1.7% as it closed 6,664. Monday was a half day with the stock market open and the bond market closed for the holiday. The S&P 500 clawed back about half of the previous Fridays losses with its biggest one-day gain since May 27. Trump eased investor worries about growing trade tensions between China and the U.S. with a Sunday Truth Social post of Dont worry about China, it will all be fine. That sent tech stocks such as Oracle, AMD and Nvidia up broadly, leading the market higher with the tech-heavy Nasdaq 100 notching a more than 2% gain. On Tuesday the focus shifted to Fed Chair Powell as he signaled that the Fed is more worried about the job market than keeping prices stable, providing a signal that the central bank will likely cut its key interest rate twice more this year. At the close however, the S&P 500 lost 0.69%. Stocks saw choppy trading on Wednesday, but the S&P 500 clawed back Tuesday loss with a 0.68% gain as investors were encouraged by strong earnings from major banks. However, on Thursday the focus shifted from major to regional banks as Zions Bancorp (ZION) and Western Alliance Bancorp (WAL) both admitted to being victims of suspected fraud related to property loans, which seesawed the S&P 500 as it gave back about half of Wednesdays gain. Finally, on Friday investors seesawed back and tried to move past regional banks credit concerns. And, since we started the week with China news, why not finish the week off with more China news. In Friday afternoon Treasury Secretary Bessent said he would be speaking with his Chinese trade counterpart on Friday evening, and Trump also said that a meeting with China President Xi Jinping was still likely at the end of the month. As such the S&P 500 rallied into the close finishing the week at 6,664. On the technical side we saw a lot of seesaw halfway action this week as the S&P 500 has had six consecutive days of down and then up movement. We have also had five consecutive weeks of up and down action. And over those five weeks, the S&P 500 has been range bound between 6,550 and 6,764. And with Fridays close of 6,664, were pretty much at the mid-point of this consolidation period. And with consolidation you have a glass half full or half empty scenario, dependent upon which way it breaks out. While no one can predict the future, the half full scenario seems more likely. So lets focus on 29 October when we have the next Fed interest rate decision, which based upon the above tilts the scale to the cut side. Earnings season has just started, and the results have been encouraging. We get Teslas report next Wednesday and then Microsoft, Meta and Alphabet on 29 October, followed by Apple and Amazon the next day. In the meantime, hopefully the government shutdown will be settled by the 29th. As such, we could get more of this seesaw action leading up the 29th, but the probability leans towards a glass half full scenario and a possible bull run into year end. For TSP TIPS the Composite Scores of the C, S and I funds remain similar to last week and the Performance Ranking of the three has narrowed to less than 1%. As such we recommend no changes to our current investment mixes, and hopefully well see a clearer picture next week in anticipation of a month-end reallocation.