This Week

The next two weeks could set the tone for where equities head into year-end, with one last wave if key economic data ahead of the September Fed meeting. This week is highlighted by Friday’s NFP jobs report. More on the week ahead in a bit — but first, a roundup of news from over the Labor Day weekend.

• Stocks Hold Steady as Testing Month Gets Underway (Bloomberg)

  • S&P 500 futures were little changed after Friday’s tech rout, with cash trading in US stocks and Treasuries closed for the Labor Day holiday. Asian equities were mixed, with a 19% surge in Alibaba Group Holding Ltd. contrasting with a slump in chipmaking shares. The dollar traded flat.

• Stock Market’s Fate Comes Down to Next 14 Trading Sessions (Bloomberg)

  • The next few weeks will give Wall Street a clear reading on whether this latest stock market rally will continue — or if it’s doomed to get derailed. Jobs reports, a key inflation reading and the Federal Reserve’s interest rate decision all hit over the next 14 trading sessions, setting the tone for investors as they return from summer vacations. The events arrive with the stock market seemingly at a crossroads after the S&P 500 Index (^GSPC) posted its smallest monthly gain since July 2024 and heads into September, historically its worst month of the year. At the same time, volatility has vanished, with the Cboe Volatility Index (^VIX), or VIX, trading above the key 20 level just once since the end of June. The S&P 500 hasn’t suffered a 2% selloff in 91 sessions, its longest stretch since July 2024.

• U.S. Stocks Are Now Pricier Than They Were in the Dot-Com Era (WSJ)

  • The S&P 500’s march to a record high this year hasn’t come cheap: By some measures, stocks have never been pricier.

    Investors are now paying more than ever for each dollar of revenue the index’s members produce. The benchmark traded at 3.23 times sales on Thursday, a record high.

• Trump tariffs that are voided by — and ones that are safe from — Friday’s appeals court ruling (CNBC)

  • The ruling on Friday from the U.S. Court of Appeals for the Federal Circuit throws a wrench in President Donald Trump’s trade agenda, and leaves his “reciprocal tariffs” in limbo. Trump has said that he will appeal the ruling to the U.S. Supreme Court. Trump’s sector-specific tariffs, including on copper and steel, remain safe from the ruling, potentially foreshadowing a new trade playbook Trump could use if his “reciprocal tariffs” are blocked.

• Japan’s Surging Bond Yields Are a Headache for U.S. Treasuries (Barron’s)

  • Rates on longer-dated bonds in Japan have risen rapidly, fueling worry that Japanese investors may move away from holding U.S. Treasuries to focus on their own backyard.

• Bitcoin is getting boring. That could open more doors for the crypto asset on Wall Street. (Yahoo Finance)

  • Bitcoin's (BTC-USD) range of wild price swings has come down this year. The key reason? It may have to do with companies rapidly stockpiling the asset, according to JPMorgan strategists. The largest cryptocurrency's three- and six-month rolling volatility, meaning the speed and extent of its price changes over those time periods, has fallen to a historically low level. This trend has continued even as bitcoin's price set new record highs in May, July, and August.

We kick off the week with slightly higher short-term vol, driven by Friday’s selloff. The SPX is pricing a 1.2% move for this 4-day week — still low by historical standards, but above last week’s 1.2% expected move across 5 sessions.

This Week’s Expected Moves:

• SPX/SPY: 1.2% (6375-6525)

  • QQQ: 1.7%

  • IWM: 2.2%

  • TLT: 1.3%

  • USO: 2.5%

Notably, weekly volatility expectations in both QQQ and IWM have been climbing. For QQQ, that’s happening even though most megacaps are done reporting. As we’ve highlighted the past couple of weeks, the market looks to be shifting from an earnings-driven, idiosyncratic vol regime — with big single-stock moves but quiet indices — to a more binary setup, where sentiment and upcoming economic data could drive the entire market more in unison.

Here’s this week’s calendar, highlighted by NFP on Friday:

Economic Calendar: (consensus)

• Tuesday

  • 10am - ISM Manufacturing

• Wednesday

  • 10am - JOLTS Job Openings

  • 10am - Factory Orders

  • 2pm - Beige Book

• Thursday

  • 8:15am - ADP Employment (68k)

  • 8:30am - Initial Jobless Claims

  • 10am - ISM Services

• Friday:

  • 8:30am - Nonfarm Payrolls (75k, 4.3%)

We’re likely to see volatility ramp up into Thursday’s close, and that would obviously be exacerbated by any market weakness beforehand. But right now Friday IV in SPX is 14, that’s likely to be in the 20’s even with a sideways market move into Friday morning.

As noted Friday, while a September rate cut looks like a lock — the real question is what kind of economy the Fed is cutting into. If jobs and inflation hold steady, equities could have the fuel to cruise, maybe even rip, into year-end. But if the data turns weaker, those cuts will land in a moment of fragility and investor sentiment could quickly shift negative

This week’s earnings calendar is highlighted by Salesforce on Wednesday and Broadcom on Thursday:

Earnings (with expected moves):

• Tuesday 

  • Pre-market: NIO 11%

  • After-hours: ZS 9%

• Wednesday

  • Pre-market: DLTR 7%, M 8%

  • After-hours: CRM 7%

• Thursday

  • After-hours: AVGO 6%, LULU 11%, DOCU 12%, PATH 11%

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