Markets will start today’s trading session with Nasdaq (QQQ) entering correction territory. Last Friday, U.S. stocks fell for a second day in a row. Market participants speculated that the weak job report indicated that the Federal Reserve fell behind the curve.
They believe that the Fed should have cut rates earlier. Instead, it is pondering a rate cut next month. CME’s FedWatch tool now forecasts a 50 bps cut with a 69.5% chance. This is up from 22%.
The Saham Rule indicates a recession ahead. This happens when the three-month moving average of the unemployment rate rises by 0.50% above its low from the last 12 months.
What To Do
Investors who hold the S&P 500 (SPY) ETF will need to re-evaluate their risk exposure to the magnificent seven stocks. If shares of Apple (AAPL) and Microsoft (MSFT) fall by more, SPY ETF will underperform. Conversely, after treasury bond yields rose, the 20+ Year ETF (TLT) will continue to rise.
Watch Amazon (AMZN) closely. Co-founder Jeff Bezos sold more shares at $200. AMZN stock closed at $167.90, down by 8.78% on August 2.
Apple (AAPL) stock is steady. Despite Berkshire selling more shares, the upcoming iPhone announcement may encourage cash-strapped consumers to upgrade their devices.
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