Momentum stocks were back in vogue last week as investors shook off economic data and September rate cut hopes were renewed.
There have been many comparisons made recently to the Tech Bubble of the late ‘90s and the current state of the market. However, volatility and price movement between the two periods does not seem to match up. We have not seen a spike in the VIX (volatility index) as we have seen previous to bear markets in 2000, 2008, and 2020. In addition, we have still not seen a dislocation between Nasdaq stocks and S&P 500 stocks like we witnessed in 1999 and 2000.
Meanwhile, the labor market is beginning, if it hasn’t already, normalized.
The JOLTs job openings report last week showed another decline in the number of job openings. On a per unemployed worker basis, job openings have reached pre-pandemic levels. Employers are being more selective in their hiring and current workers may not find it so easy to switch jobs. At the same time, we are not seeing mass layoffs in the labor market, so stability in the job market is evident. Last week’s Jobs Report showed 272,000 jobs were added, which was higher than the market expected. The futures for a September rate cut show about a 50:50 probability, but this week’s CPI report for May is expected to show little change from the previous month. Fed comments will be closely watched this week.
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