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Market Behavior: What to Expect in the Last Week of Summer

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Part 2
Market Behavior: What to Expect in the Last Week of Summer PART 2 OF 8

What Could Move the S&P 500 Index This Week?

S&P 500 Index lost ground

The S&P 500 Index (SPY) closed the week ending August 25 at 2,443.05 and rose 0.72%—compared to the close on August 11. A reduction in global risk aversion arising from North Korean tensions helped the index recover some losses in the previous week. However, uncertainty surrounding US political affairs continued to impact equity markets’ performance. News about tax reforms should have lifted the market sentiment, but that wasn’t the case last week.

The gains in the S&P 500 Index (IVW) were broad based. The S&P 500 real estate (VNQ) sector was the best performer for the week ending August 25. Ten out of the 11 main sectors posted a positive close last week. The consumer staples (XLP) sector was the only sector that posted losses last week.

What Could Move the S&#038;P 500 Index This Week?

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Speculators decreased bullish bets for the second week

For the week ending August 25, the S&P 500’s (IVV) large speculators decreased net bullish positions to 24,951—compared to 28,128 contracts the previous week. The data were reported by the Commodity Futures Trading Commission in its weekly “Commitment of Traders” report. The data were collected on August 22. Uncertainty surrounding the political situation in the US could add to the bearish sentiment for the week ahead.

What could impact the S&P 500 Index this week?

Economic data from the US markets this week include the PCE inflation data for July and the second GDP estimate for Q2 on Thursday. The important non-farm payrolls data will be released on Friday.

Markets’ major focus will still be on the political situation in the US. President Trump’s recent threat about the debt ceiling will likely limit the positive momentum in equity markets. Markets will likely remain range bound if there aren’t any new surprises this week.

In the next part of this series, we’ll analyze why the US dollar (USDU) depreciated after the Jackson Hole symposium.

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