The volatility that dominated markets in the early part of the month sharply reversed in the past week, driven by growing expectations of interest rate cuts that have bolstered investor risk appetite.
The latest batch of inflation statistics for August have given the green light for the Federal Reserve to proceed with an interest rate cut, which is highly likely to occur on Sept. 18.
The remaining question concerns the size of the cut — whether it will be 25 basis points or 50 basis points — though market consensus and recent comments from Fed officials suggest the more conservative 25 basis points is the likely scenario.
Risk assets experienced a significant rebound, with the S&P 500, as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), recovering losses from the prior week and notching five straight days of gains. A similar picture emerged for the Nasdaq 100, which marked the best week since October 2023.
Treasury yields fell substantially and the dollar weakened, driving the price of gold to fresh all-time highs.
Additionally, the week saw the first televised debate between Vice President Kamala Harris and former President Donald Trump, with polls indicating Harris outperformed, further widening her lead.
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Gold Miners Surge
Gold mining stocks, as monitored through the VanEck Gold Miners ETF (NYSE:GDX), rallied this week, marking on Thursday their best one-day performance in six months as gold prices hit new record highs. A macro strategist highlighted striking similarities between today's economic landscape and the turbulent 1970s.
VP Harris Boosts Solar
Solar stocks, tracked by the Invesco Solar ETF (NYSE:TAN), surged as Vice President Harris emerged as the clear winner in her debate with Trump, bolstering confidence in clean energy policies. Several leading renewable energy companies saw sharp gains this week.
Small Cap Rally
In an exclusive interview with Benzinga, a Lazard small-cap expert forecasted a 30-50% rally in the Russell 2000, fueled by declining interest rates and strengthening economic conditions. With the Federal Reserve poised to begin a rate-cutting cycle, small-cap stocks are anticipated to outperform, closing the performance gap with larger-cap counterparts.
Autonomous Vehicle Growth
U.S. autonomous vehicle sales are projected to reach 230,000 units by 2034, following renewed progress at Alphabet Inc.'s (NASDAQ:GOOG) (NASDAQ:GOOGL) Waymo and General Motors Co.'s (NYSE:GM) Cruise. Advancements in technology and regulatory approvals are expected to drive the industry forward, boosting consumer adoption and market penetration.
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