There’s one major catalyst in the market that looms above the others.
It has yet to drop, but the chips are lining up. And momentum is already on the move.
The #1 trade I’m watching.
This is the biggest point of interest, for the U.S. President and traders alike.
It’s impacted by the Iran war, it’s been under scrutiny for years, and it touches almost every U.S. household.
We were prepared for the worst…
But the opposite happened.
Two Reports Just Changed September
Wall Street spent all of July braced for an interest rate hike.
Oil kept spiking on the Strait of Hormuz headlines, and traders priced Kevin Warsh as hawkish.
Heading into this week, CME FedWatch put the odds of a September increase at 55%.
Then the data landed…
- The Bureau of Labor Statistics reported Wednesday that headline CPI only rose 0.1% in July, pulling the annual rate down to 3.4% from June’s 3.5%.
- Thursday morning, PPI for final demand printed flat — unchanged month over month — with the annual rate cooling to 4.7% from 5.5% in June.
Producer prices tend to lead consumer prices.
When the wholesale number stops climbing, the inflation on our grocery bill is expected to follow.
Traders repriced in a hurry and hike odds fell from 55% before CPI to 42% after, then slid to 32% post PPI.
Why That Lifts Stocks
Interest rate hikes kill the bullish narrative because it becomes more expensive to take out loans and expand businesses.
The idea is that businesses will stop spending, and the lack of demand slows inflation.
We’ve already seen inflation slow (the CPI and PPI numbers). So there’s less of a need for rate hikes. And some people are already talking about rate cuts.
I’m not calling an all-clear. Inflation at 3.4% still sits well above the Fed’s 2% target, and gasoline has already crept back to roughly $4.07 a gallon from $3.87 a month ago.
But the market likes what it sees, and this sentiment could continue.
My #1 Watch
The most anticipated earnings announcement of the year lands on August 26 after the close.
NVIDIA Corporation (NASDAQ: NVDA)
The most recent earnings season was divisive…
The market rewarded positive revenue from tech stocks and stopped making excuses for the ones that fell behind. The pressure is on for NVDA…
I think we’ll see a bull rally on this stock into the earnings announcement.
Given the current bullish nature of the market and the recent precedent of investors rewarding only the best AI stocks, people are getting excited about owning NVDA again.
I’m looking to play the pullbacks on this stock as it pushes higher.
Remember, we could see a pullback directly after the earnings announcement as a result of the early bull run. Make sure to reassess your position before the data drops on August 26.
Mark your levels, take gains into strength, and respect your risk level.
The market is no place to gamble.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
