A Glimpse at Today’s Market Sentiments

The Calm After the Storm

It’s been a wild week in the markets, but July’s surprising employment figures are showing signs that fears of an impending recession might not be as dramatic as we thought. After a substantial dive, stocks managed to recover almost all their losses in a single leap, while measures of market volatility are settling into a more standard range.

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Stocks Surge: A Moment of Relief

Thursday’s Stunning Comeback

On Thursday, we witnessed a staggering 2.3% rise in stock prices, marking the best single-day performance in over a year and a half. This brought the week’s losses down to a manageable 0.5%, although, if the week ends here, it would still hit the longest losing streak we’ve seen in nearly 12 months.

Volatility and Currency Conundrums

Calming of the Markets

The usual troublemakers of the week, namely the fear index signaling stock volatility and the Japanese yen, have both settled down. The fear gauge is now just 4 points off its 30-year average, while the yen is holding steady above 147 against the dollar.

Unexpected Job Claims Boosts Confidence

A Surprising Drop in Jobless Claims Sparks Optimism

Thursday’s rally can largely be attributed to a surprising drop in weekly U.S. jobless claims. This news shifted the focus from worries about employment cuts to the potential for increased labor force participation and temporary weather impacts affecting jobs.

Market Predictions Flowering

What’s Next for the Fed?

Looking toward next week, the anticipation grows for July’s U.S. inflation report. Futures markets now seem a bit cautious about whether the expected Federal Reserve rate cut next month will be a modest 0.25% or a bolder 0.50%.

Sinking Treasury Yields: A Silver Lining

Lower Yields Amid Cautious Optimism

With a somewhat quiet day ahead, markets are pricing in 38 basis points of rate cuts by September and over 100 bps for the full year. On Friday, yields on both 10 and 30-year Treasuries dropped again, with the 10-year yield slipping back below the 4% mark.

Fed Officials See Signs of Recovery

Smiles from the Fed

Federal Reserve officials express growing confidence that inflation could be cooling enough to permit future rate cuts. Richmond Fed’s chief, Thomas Barkin, remains optimistic as discussions suggest a continued positive trend.

Wall Street Futures and Stock Performance

Daylight on the Horizon

As we head toward Friday, futures for major Wall Street indexes are up between 0.5% and 1%. Despite some turbulent moves in individual stocks, data shows a healthy annual profit growth rate of 13.8% for the S&P 500 in the second quarter, surpassing earlier projections.

Standout Performers: Eli Lilly’s Triumph

A Success Story in Pharma

Eli Lilly’s stock took a significant leap on Thursday, rising nearly 10% after the company raised its profit forecast, driven by the impressive sales of its weight-loss drug, Zepbound, which crossed the $1 billion mark for the first time.

Global Markets Reflect U.S. Momentum

European and Japanese Stocks Join the Rally

Following Wall Street’s surge, stocks in Europe and Japan are also climbing, contributing to a noteworthy rebound after facing a sharp drop earlier in the week. However, China’s main index lagged behind and closed slightly lower.

Deals and Political Uncertainties

Changes in the Investment Landscape

The British investment platform Hargreaves Lansdown has accepted a hefty takeover offer, aiming to secure its position in the fiercely competitive UK market. Meanwhile, U.S. political chatter casts shadows on the year ahead, as former President Trump voices cautionary remarks about the Federal Reserve’s independence.

Polls Point to Kamala Harris

Electoral Predictions Heat Up

Election fever is building, with polls suggesting Vice President Kamala Harris holds a slight lead over Trump, both nationally and in crucial swing states. Betting markets echo this sentiment, suggesting a solid chance of her victory.

Eyes on Key Indicators

What’s Coming Up?

Today’s markets will be watching for significant indicators, including Canada’s July employment report and U.S. corporate earnings from various companies, as traders look for additional direction.