Joining me now with more to parse through all the tea leaves here in the market is senior market strategist for the NYSC Michael Rankin.
Michael, come on in.
Pretty strong start to August.
What do you make of it?
Blue skies, sunshine, a lot of green on the screen, and new all-time highs pretty much across the board.
What is fueling this rally?
Yes, there's a little bit of everything, right?
So, you had kind of the news coming out of the Middle East this morning, right, as we're looking for a potential diplomatic resolution to that situation.
But then we have Had a positioning reset, you know, with shades of what we had seen at the end of Q1, right, where you had investors get a little bit concerned.
We had this big momentum unwind throughout the month of July where you saw tech, you know, pretty much across the board, you know, under, under pressure, right?
And then we've had this phenomenal, phenomenal earnings season yet again.
So if you look at Q2 earnings, year over year earnings growth rates are about 50% on a year to year basis now if you.
Some of that comes from the gains in the marking of anthropic positions at Amazon and Google.
But even if you remove that $150 billion mark, we're still up about 30% on a year by year basis.
So we're seeing strength pretty much across the board, and you're getting this tech trade.
The bid is back in that trade after the clearing event last Thursday.
Yes, it's pretty impressive.
Obviously earnings are fueling this hopes of a deal with.
Oil prices falling, helping indeed.
What about the economic data?
What is that telling you right now?
Yes, look, so the economic data has continued to be resilient, right?
We have the big jobs number on Friday.
Markets are looking for about 100,000 jobs to be added.
The unemployment rate to sit at 4.2%.
We haven't really seen any cracks in the labor market.
We did have a little bit of a weaker jobs report last month, but markets expect us to bounce back from that.
This week we got the.
STEM manufacturing, which accelerated to the fastest level since 2022, so we're seeing an acceleration in the manufacturing data.
We obviously are seeing kind of the strength from all the data center construction, you know, which is very much just kind of driving not only the economic data but the earnings backdrop, right?
So all things look pretty solid.
The question remains inflation, but you know as you kind of see oil prices moving lower and if we do.
Get ourselves out of the quagmire in the Middle East, we could see some of that inflation data start to move lower in the coming months.
Is this typical August action that we would see in the first few trading sessions of 5% in the first couple of days, not typical trading action.
We're not seeing kind of the summer doldrums that you would sort of expect.
I think a lot of that comes back to kind of the positioning heading in, right?
So you Really cleared positioning and then from a technical perspective we just broke out of a trading range that we've been in since May.
So 7200 to 7600 roughly in the S&P 500.
If you just take the measured move of that, right, that measures out to about a move to 8000, right?
So another 2 or 3% to the upside from where we closed today.
Yes, it was interesting.
Peter Tuchman, who's also been down here for decades, was telling us earlier that.
Sees strong volume these past two days.
Are you watching that as well?
And to what extent does that impact conviction in the rally?
Yes, absolutely right.
You're definitely seeing kind of strong volumes, as we're moving higher, right, which shows that there is a commitment to the strength, right?
And that commitment to the strength is not just happening within one sector.
Tech was very much the leadership sector today, right?
But you're looking across the board and then the underlying areas where there is a little bit of weakness in markets is.
Your defensive areas like consumer staples, utilities, right, so you are seeing kind of investors in a position for a risk on further upside in the market.
Yes, Finally, the next Fed decision mid September.
Any expectations?
Might be too early to call, but we'll see what the data says, right?
Yes, I think we're going to have to see what the data looks like.
We're going to see where oil prices are.
The Fed is very much beholden to that data as we move forward.
If we do see a re-acceleration.
In the inflation data, it's going to be hard not to move at that point.
We're watching it in real time down here on the floor of the NYSE.
Michael Rankin is senior market strategist at the NYSE.
Michael, thank you as always.
Thanks for having me.
