I could read 2 headlines again and again during the last two weeks of July: (1) tech earnings are disappointing while tech companies are doubling down on AI capex, and (2) sector rotation is happening but it is unclear if the rotation will be able to drive the rally. Given the index weights in the Nasdaq 100 and S&P 500, the sector rotation was not able to drive top line index levels.
More earnings are to come, as is the Fed’s annual Jackson Hole Policy Symposium from August 22 to 24. It will be interesting to see if the Fed will be reluctant to lower rates, while the ECB faces a stalling German economy and thus may diverge from the Fed’s interest rate policy.
Weekend back and forth in the Middle East has not yet had much impact on markets – at least not on headline index levels. That seems to me that markets are pricing in non-escalation.
Nothing yet seems to be fully driving the market, correlations are everywhere, as is performance.
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