Market update, beginning of August 2024

Week ended August 02, 2024 was highly turbulent for the US Stock Market and resulted in a sharp decline of major indices. US stocks fall was mainly triggered by a poor employment report for July. Although almost all companies in S&P 500 list declined synchronously on Friday, mega-caps and the rest of S&P 500 had significantly different trends throughout the last 2 months.

The plot above shows that the rapid growth of S&P 500 index from the beginning of June up to 10th of July is mainly attributed to mega-caps, which is rather typical for this year. But from July 11, other stocks started to gain while the top 10's direction reversed. Such a shift was mainly caused by a positive June consumer price inflation report which reassured expected rate cuts and triggered demand for small-caps and mid-caps, rising the Russell 2000 index by 3.6%.

July 24 was a disappointing day for the Magnificent Seven after Google reported increased spendings on AI and Tesla's second-quarter earnings missed expectations. At this date 2-months performance of top 10 and the rest of S&P 500 equalized.

Let's view the dynamics of StockMetrum index during the last 2 months.

It is rather obvious that the StockMetrum index efficiently anticipated both stock market's growth and decline:

• In the middle of June it rose to 75% indicating a positive sentiment;
• It rapidly declined from July, 9 to 39% on July, 17 providing a negative signal.

Currently StockMetrum index stands on 42% indicating that the stock market decline might not be over.

Publication date: 03/08/2024