S&P 500 futures have been up 0.74% this morning after the index itself closed up 0.73% yesterday. Loads of that bounce got here from tech shares: The Nasdaq Composite closed up 1.21% after a blowout earnings name from Palantir, which added one other 3.62%.
The present bullishness on Wall Avenue is a stark distinction to what economists are seeing within the macro information. Final week’s dismal jobs report being the latest side of that. “We obtained what I might name an financial information dump final week, plenty of information. They usually have been all uniformly unhealthy to ugly,” Mark Zandi, Chief Economist of Moody’s Analytics, said on The Harmony Coalition podcast “Facing the Future.”
Zandi added later, “I set off the alarm bells this weekend in that put up, simply because as soon as I actually sat down and began all the information, I am going ‘Oh, gosh! This financial system is admittedly struggling to maneuver ahead.’ And thus, ‘on the precipice of recession,’ I believe, applies.”
So if the financial system is fragile, why are buyers shopping for? As a result of they’re anticipating the Fed to step in with rate of interest cuts to rescue their bets. (Cheaper cash typically turns into stronger demand for equities.)
Goldman Sachs is at present predicting there’ll now be three fee cuts this 12 months: “A weak U.S. labour market report final Friday (August 1) has raised market issues over the U.S. financial outlook, driving a major front-end-led rally in U.S. charges. We see room for this repricing to proceed, as our baseline expectation stays for the Fed to chop charges thrice this 12 months, and two extra instances in H1 subsequent 12 months, and we see room for market pricing to shift in extra of that,” Tadas Gedminas informed purchasers in a word seen by Fortune.
His colleague Vickie Chang says that the basics—a foul labor market and declining shopper enthusiasm—are primarily being ignored by inventory merchants at present. “The core danger to progress pricing is one thing that threatens the market’s perception that it may possibly look via present weak point and low cost the prospect of recession,” she mentioned in a analysis word.
So, cuts from the Fed are within the mail, proper?
Not so quick. Zandi is gloomy about that, too. President Trump’s tariffs and his restrictive immigration coverage “elevate inflation and weaken financial progress. So in case you’re on the Fed and you’ve got a twin mandate to keep up full employment, financial system, and low and steady inflation, that will get fairly tough. How do you reply to that? And the reply is, you do nothing, and that’s precisely what the Fed’s doing.”
He’s additionally predicting a bond market sell-off, so … fingers crossed, all people!
Right here’s a snapshot of the motion previous to the opening bell in New York:
- S&P 500 futures have been up 0.48% this morning, premarket, after the index closed down 0.73% yesterday.
- STOXX Europe 600 was up 0.5% in early buying and selling.
- The U.Okay.’s FTSE 100 was down 0.33% in early buying and selling.
- Japan’s Nikkei 225 was up 0.65%.
- China’s CSI 300 was flat.
- The South Korea KOSPI was up 0.92%.
- India’s Nifty 50 was down 0.48%.
- Bitcoin rose to $114.9K.
