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WEEKLY SUMMARY: A mixed week for markets as Fed and BoJ stayed put
The Nasdaq, the Dow, and S&P 500 Index all advanced, while the Russell 2000 Index was little changed, in a week characterized by sharp swings tied to the Fed’s policy meeting, the ongoing U.S.-Iran war, and volatility in AI-related shares. Consumer discretionary led the S&P 500 sectors—supported by a late-week rally in Amazon shares. Concerns about the sustainability of heavy AI investments continued early in the week, with many AI-related shares coming under pressure amid questions about elevated capex, circular financing, and rising competition. However, sentiment reversed sharply on Thursday after Microsoft reported stronger-than-expected growth in its Azure cloud business and issued an encouraging outlook, helping support a broad rebound in recently weak tech stocks. The Fed left the rate target range unchanged. However, three policymakers dissented, voting instead to raise rates. Meanwhile, Q2 US real GDP data showed that growth is slowing down while inflation is cooling. The US Treasury yield curve steepened as short-term yields declined while the yield on the 30-year rose above 5.2% for the 1st time since 2007. The STOXX Europe 600 Index ended the week up 0.73% as Eurozone economic growth surprises to the upside in Q2; inflation ticked higher in July. Japan’s stock markets fell slightly over the week as BoJ keeps policy rate unchanged but leaves door open for September move. The dollar is down for the last six straight days, erasing all of the post-Warsh (first FOMC) gains, as interventions by the US and Japan boosted the yen.
Have a great weekend… and happy Swiss National Day !!!!
Charles & Syz Research Lab
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