Market trends were varied on Monday, showing a shift towards sectors likely to gain from decreased interest rates. Key performers included financials, utilities, and energy sectors, while small-cap stocks led the market with a significant ratio of approximately 6,000 advancers to 3,300 decliners. Notably, about 1,200 stocks reached new 12-month highs.
Conversely, the Magnificent Seven and specifically Apple (AAPL) lagged behind. The Magnificent Seven ETF (MAGS) fell by 0.8%, with Apple experiencing a larger decline of 2.8%. Meanwhile, the Russell 2000 ETF (IWM) saw a modest increase of 0.4%.
Despite numerous gains visible on trading screens, the market experienced turbulence as investors adjusted their positions ahead of the Federal Reserve’s anticipated rate cut announcement on Wednesday afternoon. Similar market behavior is expected to continue through Tuesday and Wednesday morning.
Investors now grapple with a dilemma: numerous stocks have surged in anticipation of Wednesday’s pivotal news. With a rate cut almost certain, questions remain whether the market has already accounted for this adjustment. Concerns linger about potential disappointment over the size of the rate cut, possible adverse effects of seasonality, and the future directions hinted by Jerome Powell.
The ongoing substantial market rally leading into this announcement poses risks of a negative response to any disappointing news.
In response, I’ve been selling off some holdings and currently see few appealing new buying opportunities. Nonetheless, I am satisfied with the performance of certain stocks in my portfolio, including TG Therapeutics (TGTX) and Shift4 Payments (FOUR).
