(These are the market notes on today’s action by Mike Santoli, CNBC’s Senior Markets Commentator. See today’s video update from Mike above.) The market is gathering itself into a more neutral posture ahead of inflation reports over the next two days that will fill in the macro picture the Fed will be assessing next week in its policy meeting. The broad indexes have been steady near the flat line and just below record highs, held there by another run of extreme dispersion among groups of stocks. More stocks are down than up on the day, but big banks are too strong to permit the indexes to back off, along with a couple of Mag7 names and UnitedHealth Group. Treasury yields have been in freefall for a week, the 10-year buckling from 4.3% to 4.04%, so pulling into a more neutral spot means yields leaking higher . This despite the big downward revision to estimates of job growth from April 2024 through March 2025, a somewhat greater change than most benchmark-revision exercises but consistent with other signs of a low-metabolism job market. The core dynamic across markets is bonds fixated on soft labor data and dovish signals from the Fed, while stocks hang tough with cyclicals leading thanks to a positive earnings trajectory and forward-looking indications of a reflationary growth upturn from lower rates and more expansionary fiscal setup in 2026. It’s fair to argue that this represents both asset classes choosing to believe in best-case scenarios. But it’s not implausible that some version of this reality comes to pass. Some observers are braced for a “sell the news” response to a Fed rate cut next week (perhaps because a 50bp cut creeps into market expectations and we get 25bp?). Still, while there’s not an abundance of precedents, Bespoke Investment Group reminds us that in the past when the Fed has cut rates after a long pause with equity indexes near a record, the forward-looking stock returns have been better-than-average. Reflecting the mixed internal action and the overheated/overbought state of the tape exiting July, the S & P 500 has slowed, flattened out and cooled over the past five or six weeks. Whether this will allow the S & P 500 to continue avoiding anything more than a 3% pullback (somewhat like the 2017 market path), even through September and October, is at the center of the tactical debate. Apple shares showing the market underwhelmed by its new-product event at first glance, trading down 1.5% or so. Fair to note the stock has ripped 18% from Aug. 1 through last week, leaving some room for normal consolidation. The stock is at an interesting spot, on the verge of a “golden cross” in which its 50-day moving average crosses above its 200-day. Not a foolproof buy signal, though the past two times this occurred preceded a decent further up leg. Probably would be tough to surmount the December high near $259 very soon, given the interplay of valuation (back above 30-times forward earnings) and modest growth profile.
