#analytics #atrani #weekly
Major US stock market indexes ended the week mixed, with narrow leadership again masking broader weakness. The Dow and equal-weight S&P 500 declined, while the S&P 500 and Nasdaq Composite gained, supported by Nvidia and a handful of other large stocks.

September’s poor historical record added to the cautious mood. Since 1928, the S&P 500 has fallen in 55% of Septembers, averaging a 1.1% loss, according to Citadel Securities. The pattern is far from dependable, though: Ameriprise’s Anthony Saglimbene notes that the sharpest declines have generally coincided with deteriorating market or economic conditions.

Several strategists nevertheless saw reasons to become more defensive. JPMorgan’s Andrew Tyler turned tactically cautious ahead of the September 16 Fed decision, while Wells Fargo’s Ohsung Kwon questioned whether financing constraints could slow the AI investment boom. Citadel Securities’ Scott Rubner pointed to fading support from earnings season, retail buying and corporate buybacks. He remained constructive longer term but favored trimming exposure into rallies.

Positioning complicates the bearish case. Goldman Sachs’ prime brokerage data showed US long/short hedge-fund net leverage falling to 47.6%, near the bottom of its one-year range, as shorts and hedges grew faster than longs. That leaves room for positive surprises to trigger buying as managers unwind defensive bets. Yet aggregate equity positioning remained overweight, while systematic funds had already rebuilt exposure after July’s selloff. The market therefore enters September with fewer obvious sources of incremental buying, but enough bearish positioning to amplify an upside surprise.

Nvidia rose 5.9% after agreeing to buy Hugging Face for about $13 billion in a push beyond chip sales. The platform would give Nvidia a larger role in the software ecosystem supporting demand for its hardware. DA Davidson’s Gil Luria viewed the deal as a defensive move that keeps a key platform for open AI models out of rivals’ hands.

Globally, country ETFs were mostly higher, with the global ex-U.S. equity index increasing 1.1%.

Global growth also strengthened in August: the J.P. Morgan Global Composite PMI rose to a 27-month high of 53.5, with new orders expanding at the fastest pace since May 2023. Services regained the lead at 53.7, its highest in 20 months, while manufacturing remained solid at 52.3. Activity expanded across all 21 sectors tracked by S&P Global, and inflation pressures eased to their weakest since February.

Crypto assets advanced alongside gains in several non-US equity markets, with Bitcoin and total market capitalization both rising 2.3%. Bitcoin again failed to break above $80,000, but institutional demand remained supportive, with weekly inflows reaching $987 million.

According to CME FedWatch, the implied Fed funds path changed little overall but became slightly more back-loaded. The probability of a September hike increased to 59.4% from 57.0%, while the expected timing of a second 25 bp increase moved back to January from December. Futures now imply around 25 bp of cumulative tightening by year-end 2026, slightly down from 27 bp a week earlier. John Williams and Christopher Waller initially pushed hike expectations below 50% by emphasizing recent inflation progress, before Friday’s stronger payroll report reversed much of that move. Next week’s CPI is likely to be decisive for the September meeting.

The Treasury curve, by contrast, steepened more visibly. According to Bloomberg, the 1-year yield declined 2 bp to 4.11%, while the 10-year rose 6 bp to 4.78% and the 30-year increased 3 bp to 5.24%. Long-dated Treasuries were caught in a broader global sovereign-bond selloff as higher energy prices revived inflation concerns and investors demanded more compensation for heavy government borrowing and an approaching wave of corporate issuance.

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https://atranicapital.substack.com/p/week-36-market-update-for-august