Weekly Trader's Outlook

If you read last week's blog, you might recall that I had an overall "Cautious" stance on stocks this week, citing some technical deterioration in the S&P 500 Equal-Weight/Russell 2000, bearish seasonality and continued uncertainty around Iran/oil prices/yields. On the week, stocks are on track to be little changed, but that doesn't convey the intra-week volatility that unfolded. Coming into the week, oil prices and yields were higher following an escalation of Iran strikes on commercial shipping in the Strait of Hormuz. The U.S. subsequently launched retaliatory strikes on Iran, and Iran responded with additional attacks, so Middle East tensions escalated this week. WTI crude prices are up roughly 9% this week, with WTI October futures last seen trading down $0.20 to $91.10/barrel. Diesel prices in the U.S. hit a record $5.85/gallon earlier today.

The move higher in oil prices sent global bond yields higher as well. Earlier this week, Japan's 10-year yields hit a 30-year high, UK 10-year yields hit a 19-year high of 5.294%, France 10-year yields hit a 17-year high and German 10-year yields hit a 10-year high. Even in the U.S., yields on the 10-year Treasury hit the highest level (~4.80%) since November 2023. Aside from the potential inflationary impact due to higher oil prices, concerns around rising federal deficits, heavy issuance of debt (in part due to the artificial intelligence, or AI, buildout), monetary policy and longer-term economic growth forecasts are all factors influencing the sovereign debt market. In the U.S., potential rate hikes from the Federal Reserve are also weighing on equity risk appetite, and this morning's relatively strong jobs report is influencing those expectations (more on this in the "Economic Data, Rates & the Fed" section below). Speaking of the Fed, Christopher Waller provided a boost to equities yesterday after the Fed Governor said he is inclined to hold rates steady, though next week's monthly inflation reports (Consumer Price Index, or CPI, and Producer Price Index, or PPI) will likely be the determining factor before the September Federal Open Market Committee (FOMC) meeting on September 15th-16th.

The Q2 earnings season is essentially finished, as 493 of the S&P 500 companies have reported results. From the companies we've heard from, 69% have beat estimates on the top line while 88% have beat on the bottom line. More notably, earnings per share (EPS) growth has been 53% and revenue growth is up 15.61%. When excluding one-time investment gains from mega-cap tech, the EPS growth rate for the S&P 500 is tracking 26-29%, which is still exceptionally strong.

At the time of this writing (2:45 p.m.ET) stocks are lower across the board, and near the lows of the session, except for some relative strength in the Russell 2000 index (DJI - 255, SPX - 30, $COMP - 93, RUT + 3). Looking at the price action, stocks appear to be reacting to oil prices (WTI at $91.56/barrel is near the upper end of the intraday range today) and subsequent impact to Treasury yields. 10-year Treasury yields hit a fresh intraday high of 4.812% earlier in today's session but are back down to 4.78% at the time of this writing. If I were to simplify how I see the near-term trading environment, U.S. equities move inverse to oil prices and Treasury yields. Therefore, developments in the Iran conflict, yields on global sovereign debt and economic data (such as next Friday's CPI) are all potential catalysts to move markets next week. Technically, the major indices have been holding ground and have mostly been in sideways consolidation patterns over the past month, which one could interpret as relatively bullish given the escalation in Iran, and correspondingly higher oil prices and yields. However, I'm not sure how resilient U.S. equities will be if the Iran conflict gets worse and oil prices/yields continue to march higher. Throw in bearish seasonality during the month of September, along with the potential for higher volume/adjustments to positioning when most fund managers/traders come back from vacation next Tuesday (Monday is Labor Day), and I'm going to stay with a "Cautious" outlook for next week. What could challenge my forecast? Obviously, lower oil prices and falling yields could lift stocks, but a tame/cooler-than-expected CPI report next Friday would almost certainly provide a boost.

• Monday (Sep. 7): no reports (Labor Day holiday)
• Tuesday (Sep. 8): Consumer Credit, NFIB Small Business Optimism
• Wednesday (Sep. 9): MBA Mortgage Applications Index
• Thursday (Sep. 10): Continuing Claims, EIA Crude Oil Inventories, EIA Natural Gas Inventories, Existing Home Sales, Initial Claims, Producer Price Index (PPI), Wholesale Inventories
• Friday (Sep. 11): Consumer Price Index (CPI), Treasury Budget, University of Michigan Consumer Sentiment

• Monday (Sep. 7): no reports (Labor Day holiday)
• Tuesday (Sep. 8): ABM Industries Inc. (ABM), Braze Inc. (BRZE), Casey's General Stores Inc. (CASY), GameStop Corp. (GME), ServiceTitan Inc. (TTAN), United Natural Foods Inc. (UNFI)
• Wednesday (Sep. 9): Academy Sports and Outdoors Inc. (ASO), AeroVironment Inc. (AVAV), American Eagle Outfitters Inc. (AEO), Chewy Inc. (CHWY), Core & Main Inc. (CNM), Korn Ferry (KFY), Navan Inc. (NAVN), SailPoint Inc. (SAIL), Signet Jewelers Ltd. (SIG), The Cooper Companies (COO), Trip.com Group Ltd. (TCOM)
• Thursday (Sep. 10): Adobe Inc. (ADBE), Caleres Inc. (CAL), Copart Inc. (CPRT), Designer Brands Inc. (DBI), Macy's Inc. (M), Mastercraft Boar Holdings Inc. (MCFT), Oracle Corp. (ORCL), RH Inc. (RH), Tsakos Energy Navigation Ltd. (TEN)
• Friday (Sep. 11): Hooker Furnishings Corp. (HOFT), Kroger Co. (KR)

There was a healthy dose of economic data this week, which was highlighted by this morning's monthly jobs report and the U.S. manufacturing and services reports. August Nonfarm Payrolls came in well above estimates this morning (+162K vs. +55K est.), and July was revised from an initial loss of 23K to a 21K gain. Stock futures sold off, and rate hike probabilities rose following the report, which appears to be due to a belief that a healthy labor market will make it easier for the Fed to move forward with rate hikes. Regarding the Manufacturing and Services reports from S&P and ISM, the economy remains firmly in expansion territory, though inflation is showing up in the prices component of these indexes. Here's a breakdown of the reports:

• Nonfarm Payrolls: Headline payrolls jumped by 162,000 in August, which was well above the +55,000 economists were expecting. Additionally, July payrolls were revised up to +21,000 from the initial report of -23,000 and June was also revised higher by 11,000, which brings the three-month average to +71,000. Household employment also saw impressive gains, rising by 569K for the month.
• Unemployment Rate: Remained unchanged month-over-month and was in line with estimates at 4.1%.
• Average Hourly Earnings: Average hourly earnings increased 0.3% month-over-month, which was a tick above the +0.2% economists were expecting. On an annualized basis, average hourly earnings were down 0.1% from the prior month to 3.1%, which was 0.1% below the +3.2% economists were expecting.
• U.S. Labor Force Participation: Dropped to 61.4% in July, which represents the lowest reading in over five years.
• Average Workweek: 34.4 versus 34.3 expected.
• ADP Employment Change: U.S. private employers added 38K jobs in August, which was a slowdown from the (upwardly revised) 46,000 added in the prior month, and below the +48K economists were expecting. Payrolls in education and health care services increased 45K, while manufacturing payrolls declined by 17K.
• JOLTs-Job Openings: Ticked up modestly to 7,271,000 in July from 7,182,000 from the prior month, but the figure was below the 7.313M economists were expecting.
• ISM Non-Manufacturing Index: Rose to 55.4% in August from 54.1% in July, remaining firmly in expansionary territory (> 50.0) for the 26th consecutive month. The strength was driven in part by New Orders, which registered a three-year high of 60.9. However, the Prices Index increased to 72.6 in August from 70.3 in July.
• S&P Global U.S. Services PMI: Increased to 54.6 in July from 51.2 in June, which represents the highest reading in nine months.
• ISM Manufacturing Index: Decreased to 54.6% in August from 55.6% in July, remaining in expansionary territory for the eighth consecutive month. New Orders declined 3% from the prior month to 53.7%, while the Prices Index remained unchanged from the prior month at 71.1%.
• S&P Global U.S. Manufacturing PMI: For the third consecutive month the index was unchanged at 53.9, with both output and new orders easing slightly during the period. Survey respondents cited higher cost levels, driven by heightened tariff and energy price uncertainty, but remained optimistic about business in general.
• Construction Spending: -0.5% vs. 0.3% est.
• Productivity-Revised: 1.4% vs. 1.5% est.
• Unit Labor Costs - Revised: 1.2% vs. 1.3% est.
• Factory Orders: 0.9% vs. +0.5% est.
• EIA Crude Oil Inventories: -4.45M barrels.
• EIA Natural Gas Inventories: +30 bcf.
• Initial Jobless Claims: Initial applications for U.S. jobless benefits increased 1K from last week to 206K, which was 1K above the 205K economists were expecting. Continuing Claims rose by 8K from the prior week to a seasonally adjusted 1.779M.
• The Atlanta Fed's GDPNow initial "nowcast" for Q3 GDP was revised up to 4.7% yesterday from 4.6% last week, primarily driven by an uptick in consumer spending.

U.S. Treasury yields moved modestly higher this week, mostly driven by inflation concerns related to higher oil prices and the ongoing conflict in the Middle East.  Compared to last Friday, two-year Treasury yields are up ~2 basis points (4.366% vs. 4.341%), 10-year yields added ~5 basis points (4.77% vs. 4.72%) while 30-year yields increased ~3 basis points (5.24% vs. 5.21%).

Market expectations around a potential rate hike from the Federal Reserve experienced some volatility this week. Per Bloomberg, the probability of a Fed rate hike at the September FOMC started the week at 65%, then dropped to 51% on Thursday following some relatively dovish commentary from Fed Governor Christopher Waller and are back up to 61% today on the strong jobs report. The first theoretical 100% probability of a rate hike remains at the December FOMC meeting.

The Dow Jones Industrial Average index ($DJI) is on track to be down slightly this week, but the good news (for the bulls) is that support held up at the 50-day Simple Moving Average (SMA) for the fourth time over the past six weeks. The reinforcement of technical support is net bullish on a near-term basis, but the index is essentially flat over the past three weeks, so momentum has stalled (as evidenced by the deceleration in the RSI). In short, traders can consider using the 50-day SMA at 52,945 as the technical bullish/bearish line in the sand on a near-term basis.

Near-term technical translation: neutral to slightly bullish
Intermediate-term technical translation: bullish (intermediate uptrend still intact)

The Nasdaq Composite Index ($COMP) is on track to be slightly higher on the week, which may have been helped by strong earnings reports from tech large-cap AI darlings Snowflake and Dell Technologies. The $COMP bounced off the 50-day SMA for the second time over the past two weeks, which is a healthy technical sign. However, the index has been in a trading range of roughly 26,000-26,800 over the past month, so like the $DJI, appears to be in a period of sideways consolidation.

Near-term technical translation: neutral to slightly bullish

The Bitwise 10 Large Crypto Index is up 3% since last Friday, with bitcoin up 3% and ether up 1% at the time of writing. With August in the books, investors should be aware of September crypto seasonality. Historically, September has been the weakest month for crypto returns, on average. However, investors positioning for this seasonal weakness could find themselves offside following last month's short squeeze which may have acted as a clearing event for negative sentiment. At the time, futures positioning was temporarily offside, and sentiment overly negative based on perpetual future funding rates and the Fear and Greed Index. Since then, the market appears to have balanced itself in terms of sentiment and futures positioning.

Throughout this rally, open interest rose ~16% alongside a ~26% price move. That means this wasn't simply shorts getting liquidated and contracts being closed out as a result, which would reduce open interest. Instead, we've seen an expansion of leverage. Rising open interest alongside rising prices has historically skewed bullish for forward returns, according to data from Glassnode as of September 4, 2026. This expansion in leverage has been accompanied by strong net inflows into exchange-traded products (ETPs). It is important to note that leverage cuts both ways, and high open interest can also put the market at risk of a sharp, liquidation-driven decline if prices reverse. Ultimately, positioning has reset and the setup appears less fragile than it did a month ago, though that reflects reduced downside fragility, not a directional call.

Spot ETPs have continued to record net inflows while bitcoin's average cost basis remains near $80,000—as measured by ETP cost basis ($83,000) and active investor cost basis ($76,000), according to data from Glassnode as of September 4, 2026. The crypto market could see upside if prices breach these levels, as it would mean the average bitcoin investor had moved back into profit, a threshold that has historically influenced sentiment. That said, a failure to hold above these levels would leave the average investor underwater, which could weigh on the market. Historically, October and November have been strong months for cryptocurrencies, but past performance is no guarantee of future results.

Jim Ferraioli, Director of Digital Currencies Research and Strategy, authored this report.

The Bloomberg chart below shows the current percentage of members within the S&P 500 (SPX), Nasdaq Composite (CCMP), and Russell 2000 (RTY) that are trading above their respective 200-day Simple Moving Averages (SMA). In short, the SPX and RUT are on track to be flat on the week, while the CCMP is on track for modest gains, but market breadth contracted across the board. This suggests some relative outperformance by large and mega-cap stocks. Compared to last week, the SPX (white line) breadth is down to 68.80% from 71.00%, the CCMP (blue line) pulled back to 47.40% from 49.10%, and the RUT (red line) eased to 62.46% from 65.32%.

Market breadth attempts to capture individual stock participation within an overall index, which can help convey underlying strength or weakness of a move or trend. Typically, broader participation suggests healthy investor sentiment and supportive technicals. There are many data points to help convey market breadth, such as advancing vs. declining issues, percentage of stocks within an index that are above or below a longer-term moving average, or new highs vs. new lows.

This Week's Notable 52-week Highs (42 today): ConocoPhillips Inc. (COP - $1.94 to $133.87), Deere & Company (DE - $0.81 to $693.59), Marathon Petroleum Inc. (MPC - $5.24 to $382.47), Paycom Software Inc. (PAYC - $6.13 to $234.39), Pfizer Inc. (PFE - $0.36 to $28.45), Valero Energy Corp. (VLO - $4.69 to $366.00)

This Week's Notable 52-week Lows (61 today): Boyd Group Services Inc. (BGSI - $1.62 to $88.59), Builders FirstSource Inc. (BLDR + $0.09 to $64.27), Cirrus Logic Inc. (CRUS - $1.27 to $111.86), Lennox International Inc. (LII - $0.18 to $385.90), Las Vegas Sands Inc. (LVS - $0.26 to $44.25), NRG Energy (NRG + $2.61 to $114.45)