Slowdown Ahead For Markets?

Profit-taking and some earnings news from overseas caused equities to pullback on Friday, in what would have been a positive week for the market

Despite all of the drama at the Fed, futures for the September meeting of the FOMC continue to point to a 25 basis point rate cut. So far, 3mth, 2yr, & 10yr Treasury yields have moved lower the past couple of weeks. There is a lot of political moving parts before there will be any clarity on the status of Federal Reserve governor Lisa Cook. There will be court battles and plenty more D.C. drama. Grab some popcorn as it will be entertaining.

Meanwhile, economic data points to a healthy U.S. economy. Last week the 2nd revision

of Q2 GDP data showed that the economy grew by 3.3%, versus the previous release of 3.0%. The Atlanta Fed revised their estimate of third quarter GDP up substantially from +2.0% to +3.5%. Redbook Sales have remained well above average and jobless claims have remained below recessionary levels. This week's jobs report will be critically examined, especially if it provides a hint at next month's potential rate cut.

For the past several weeks we have been warning about the volatile part of the calendar

year we have now entered. Last Friday's pullback was just a glimpse at how choppy equity trading tends to be around the September-October period. News Friday that a Chinese competitor had developed a chip to rival that of Nvidia, caused the stock and several Mag 7 names to pullback. Though volatility is likely to increase, investors should stick to long-term investing goals and avoid making rash investment decisions.

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