Interest Rates Seem Bipolar As They Dip Overnight

In his regular market update for investors, Louis Navellier penned:

Stocks began the day on a downward trend, just like they did yesterday, and once again, the tech industry is attempting to boost the market. Investors are seeking refuge in the sectors that have proven most successful this year. NVIDIA Corp (NASDAQ:NVDA) has seen a further increase of $5 following yesterday's impressive surge of $28 from its previous low point.

China's vulnerability is once more causing a decline in various commodities. This includes crude oil, which is currently being tested at a rate of $81 per barrel. Additionally, gold has reached a six-month low, falling below $1,935.

Interest rates appear to have a fluctuating behavior, as they experienced a sudden drop during the night, but quickly surged due to positive retail data. The 10-year rate reached 4.28%, just 5 basis points away from the highest point in the past year. However, they then reversed course and rallied downwards, bringing the 10-year rate down to 4.18%.

The Hang Seng China index has experienced a 1% decline today, marking a 7.5% decrease for the month of August and almost the entire -7.8% for the year. In an attempt to stimulate the economy, China's central bank has decided to reduce interest rates, first by 15 basis points on the one-year maturity from 2.65% to 2.5%, and later by 10 basis points on other shorter maturities. However, the market appears to perceive these rate cuts as insufficient and occurring too late.

Retail sales in the United States experienced a significant increase of 0.7% in July, surpassing both the 0.3% growth recorded in June and the predicted 0.4% growth. Unexpectedly, core retail sales, which were anticipated to decline by -0.3%, actually rose by +1.0%. Moreover, there was another surprising development with import and export prices, as both exceeded expectations, doubling the forecasted values. This outcome highlights the uncertain nature of price trends. Additionally, it is worth mentioning that Canadian inflation figures for July also exceeded initial expectations.

In terms of its financial performance, Home Depot (NYSE:HD) delivered better-than-expected results both in terms of revenue and profit. However, it is important to note that this includes a 2% decrease in year-on-year sales. The company also restated its previous estimate of a decline in sales for the fiscal year, which is projected to be between 2% and 5%. As a result of these announcements, the company's stock has increased by 1% today and has seen a positive growth of 5.4% since the beginning of the year.

The primary ideas continue to be unchanged: Has the Federal Reserve completed its actions? Is a gentle arrival the most plausible result? Is it feasible for the international economy to expand despite China's difficulties?

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Longer Stay Expected For Fed Funds Rate

In terms of technical analysis, the S&P 500's 50-day moving average currently sits at 4,446. We have recently examined this level in the past two trading sessions, and if it is breached, there is a potential short-term danger of automated trading strategies exerting downward pressure on the market.

Supporting the narrative of a smooth economic transition in the US is the remarkably low unemployment rate, which enables retail sales to persist despite the alarming levels of consumer debt. Additionally, although the endeavor of reducing inflation from 3% to 2% will undoubtedly be a challenging task, it will result in a prolonged period of higher interest rates by the Federal Reserve. However, this circumstance also allows companies some flexibility to implement price hikes and maintain their profitability.

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An 88-year-old Japanese sports player shattered her previous global achievement by taking part in the cross-country skiing event at the 2023 Masters World Cup held in Austria. This incredible athlete had already set a new record during the Japan Masters Championships when she was 87 years old. Now, she is determined to surpass herself once more in the upcoming February 2024 Masters World Cup in Finland. For more details, refer to the original article from UPI.