arly in the week, U.S. equities rose modestly on limited financial news, with underwhelming reports on E-Commerce Sales and the Leading Indicators Index bolstering the case for a September rate cut. Despite this positive start, the S&P 500’s eight-day winning streak ended Tuesday as Yen Carry Trade concerns reignited. Later in the week, a significant downward revision to Bureau of Labor Statistics jobs data (the largest revision in 15 years), further supported expectations for a 50-basis point rate cut next month and the markets began to rally. The buying continued into the end of the week aided by numerous favorable comments from our Fed chair at the Jackson Hole Symposium.

This bounce retraced much of the recent decline which was fueled by concerns over slowing economic growth, the Bank of Japan’s interest rate policy, and AI-related sector unwinding. While these factors have temporarily eased, it’s important to note that underlying economic challenges persist.

There are still many positives at play, including economic growth, strong corporate profits, historically low unemployment, and declining inflation.

Despite the softer labor readings, jobs are still on the rise per the JOLTS (Job Openings and Labor Turnover) report, the unemployment rate is historically low, GDP continues to beat expectations, and corporate earnings and sales are trending higher. This doesn’t necessarily foreshadow a recession to me.

The rotation out of tech and into other areas of the market was apparent all week and is evidenced by the fact the “tech heavy” NASDAQ and S&P 500 were the biggest losers while small and mid-caps stole the show. The Dow Jones Industrial Average, which is not as heavily influenced by the technology sector, showed impressive gains for the week after revisiting the previous technical resistance level around the 40,000 mark. Revisiting a key level after a breakout is a textbook move and one might expect momentum to build now that this level has offered new support.