The indexes pulled back Friday on below-average volume, which I view as healthy profit-taking. We’re seeing some rotation out of growth stocks and into more value-oriented names—particularly homebuilders. These stocks tend to benefit from lower rates, and the market is looking ahead to the Fed’s September 17th meeting with expectations for a rate cut. That outlook is supported by weakening employment data and dissent from three Fed members at the last meeting who opposed Powell’s decision to hold steady. Adding fuel to the debate, Trump recently dismissed a Fed governor and intends to appoint a more dovish replacement, likely increasing pressure on Powell to ease.
It’s important to remember that while the Fed controls the Fed Funds rate, it does not directly control mortgage rates—and those are the key driver behind the homebuilding rally.
Meanwhile, gold continues inching toward all-time highs as the dollar weakens. Bitcoin faces selling pressure, with Ethereum stepping into a leadership role thanks to strong stablecoin demand. Treasury bonds remain rangebound as debt levels soar. On the trade front, Trump’s tariffs were declared illegal last week, with an appeal headed to the Supreme Court. Since markets managed to rally with tariffs in place, there’s a reasonable chance stocks could move even higher if they’re reversed—though international acceptance of the tariffs means the outcome remains uncertain.
Overall, I remain bullish.
Do to others as you would have them do to you. Luke 6:31