Things You Need to Know
- “Never another Down Day on Wall Street!”
- Russell and Equal Weight outperform, Mag 7 Struggle.
- Pay attention to the RSIs.
- Scotty calls for 50 and then another 100 bps in cuts.
- Street analysts mixed.
- Oil down, gold down, Bonds Up, Yields down.
- Try the Paccheri Pasta with Sausage Cream.
And the story continues—stocks keep advancing. Some are even joking “never another down day on the Street,” which is usually the death knell for equities.
The Dow jumped 453 pts (+1%), the S&P gained 20 pts (+0.3%), the Nasdaq added 31 pts (+0.15%), and the Russell—yesterday’s clear winner—surged 45 pts (+2%). The Transports climbed 219 pts (+1.4%), the Equal Weight S&P spiked 102 pts (+1.4%), while the Mag 7 slipped 93 pts (-0.3%).
That divergence matters. When the Equal Weight S&P and Russell are surging while the Mag 7 is soft, it tells you the tide is turning. The high-glamour names that have carried this market show signs of fatigue, while investors rotate into other sectors.
Yesterday I noted that RSIs on the S&P and Nasdaq are hovering near the overbought line (70)—not a panic signal, but a caution flag. The Mag 7’s RSI is well above 70, while the Equal Weight S&P and SMIDs are comfortably below, suggesting opportunity outside big tech. Areas to watch: Financials, Basic Materials, Industrials, Healthcare, and small/mid-caps.
Yesterday’s sector scorecard: Financials +0.5%, Industrials +0.3%, Basic Materials +1.9%, Healthcare +1.6%, SMIDs +2%. Tech was flat to down.
Let’s be honest—the market is frothy. Valuations are rich. While record highs sound great, trees don’t grow to the sky. That proverb reminds us that growth has natural limits. Nothing rises forever, and assuming stocks will keep climbing endlessly is dangerous. Don’t let FOMO dictate decisions—this is where discipline and a plan matter most.
Scotty reignited the conversation, calling for a 50 bps Fed cut in September after weaker revised labor market data. He also floated the possibility of 150 bps in total cuts over 12 months—which would take Fed funds to 2.75%-3.0%.
Meanwhile, speculation swirls over who will replace JJ in May 2026. Trump says he’s narrowed the list to three names, with an announcement just weeks away.
On the Street, opinions split UBS is calling for 25 bps, BlackRock for 50 bps. Goldman? Sitting this one out after Trump blasted Chief Economist Jan Hatzius and CEO David Solomon on Truth Social:
“David Solomon and Goldman Sachs refuse to give credit where credit is due. They made a bad prediction a long time ago on both the Market repercussion and the Tariffs themselves, and they were wrong—just like they are wrong about so much else.”
That “bad prediction” was Goldman’s call that U.S. consumers would bear 67% of tariff costs. Reality proved otherwise—no economic collapse, no global trade chaos. Many nations have come to the table, and Scotty’s team has managed the situation well. Now estimates project $300 billion in tariff revenue for 2025.
Treasuries rallied—TLT +0.8%, TLH +0.7%. The 10-year yield fell 6 bps to 4.23% and is down another 2 bps this morning to 4.21%.
Will Fed cuts push 10-year yields lower? History gives mixed signals. In 1974, cuts were followed by falling yields. But in 2024, yields climbed from 3.6% to 4.5% after cuts began before settling here. Factors in play:
Strong economic growth
Inflation concerns
Rising debt and deficits
Market expectations
Given current strength and muted inflation, yields are more likely to hold 4.25%-4.5%—unless growth stumbles, in which case they’d head lower.
Oil slipped again to a low of $61.95 before settling at $62.74. The drop reflects easing geopolitical risk ahead of Friday’s Trump-Vlad summit in Anchorage. Trump wants a deal—no deal means harsher measures and higher oil.
Gold is still trading in its $3,369-$3,420 range, also waiting for Alaska headlines. A deal likely removes risk premium, pushing prices lower; no deal could send gold higher. I’m betting on a deal—and softer gold and oil.
PPI (producer-level inflation) is expected to rise slightly m/m and y/y. Producers aren’t yet passing all costs through, but remember—PPI leads CPI, so any pass-through will show up next month. Even if PPI is hot, I doubt it changes the Fed cut narrative. I’m still in the 75-bps total cut camp for fall—how we get there doesn’t matter. Three meetings remain: Sept 16–17, Oct 28–29, Dec 9–10.
US futures mixed Dow +46, S&P -2, Nasdaq -14, Russell -6. The VIX closed at multi-month lows, flashing complacency. This morning it’s up 12 cents at 14.61 but remains well below trendlines—no fear in sight.
European markets are all higher as well. Up to about 0.4% across the board.
The S&P closed at 6466 – up 20 pts and now making yet another new 2025 high…..As the excitement continues – it is beginning to feel like a blow off – FOMO top… (Fear of Missing Out). All that means is proceed with caution…Remember – you are invested, so you are participating….Just be careful how you allocate new money into the markets….Look at those underperforming sectors to add to you outperforming sectors…to help you balance out your portfolio.
I remain in the camp that we are toppy – which only means I am more cautious on where I allocate. Doing nothing is a decision – remember – you don’t have to do something all the time…. Let your portfolio do the work…. I still expect a pullback…..We still have the end of August and the whole month of September to work through…..
Want to talk about strategy? Let’s review your plan. Call me for a complimentary, no-obligation portfolio analysis: 561-931-0190.
Take good care,
Sources: Bloomberg, CNBC, Reuters, Wall Street Journal
Disclosure: The content provided in this material is designed for educational and informational purposes only, and it is important to note that it does not constitute personalized recommendations. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of Kenny Polcari or SlateStone Wealth.
The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions, which may not necessarily align with our firm’s standpoint.
While considerable effort has been invested to ensure the accuracy and dependability of the information presented, we must clarify that we cannot guarantee the accuracy of third-party information. Our usual sources for third-party data include channels such as Bloomberg.
Paccheri with Sausage Cream
Paccheri is a large, tube-shaped pasta from the Campania region of southern Italy, particularly associated with Naples. It’s a fantastic big pasta and works well with this dish.
For this you need the pasta, sweet Italian Sausage, garlic, Olive oil, shallots, heavy cream, fresh grated parmegiana cheese and white wine (you can substitute chicken stock if you want).
Begin by bringing a pot of salt water to a rolling boil.
In a large sauté pan – heat up a bit of olive oil – add in 3 large garlic cloves (whole). Now add in the sweet sausage meat (remove the casing). Season with s&p and brown.
Once browned add in the white wine – just enough to bathe it, not drown it. Bring it to a boil and then turn heat to med low. Add in 1 c of heavy cream. Mix well. Turn heat to simmer.
Add the pasta to the water and book until aldente. (8 mins).
When the pasta is done – add directly to the sauté pan. Add in 2 handfuls of the cheese and mix well. Now add in a ladle of the pasta water (tears of the Gods) and stir to create a creamy delicious sauce.
Serve immediately.
Buon Appetito!