Weekend Update #246
Thank you for your continued support and engagement. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.
Major indexes pushed to new record highs, with the S&P 500 and Nasdaq leading gains on softer inflation data and optimism around an imminent Fed rate cut. The Dow also broke above 46,000 for the first time, even as some investors pared exposure to large caps due to concerns over stretched valuations and global uncertainty.
The Small Business Optimism Index rose 0.5 points in August to 100.8, topping expectations, while the Uncertainty Index eased to 93. Inflation pressures moderated as fewer firms raised prices, especially in wholesale, though construction, finance, and manufacturing still reported elevated price hikes. Labor shortages remain a key challenge, with unfilled job openings near multi-year lows and owners citing difficulty finding qualified workers. Compensation plans are trending higher, however, and sales expectations improved modestly.
The Producer Price Index for final demand unexpectedly declined 0.1% in August, following a 0.7% increase in July, slowing year-over-year growth to 2.6%. The decline was driven by a 0.2% drop in services, the steepest since April, led by compressed trade margins, including a 3.9% fall in machinery and vehicle wholesaling, though portfolio management fees rose 2%. Goods prices inched higher on tobacco, meat, electronics, and power, partly offset by lower natural gas, while intermediate demand posted mixed results. The margin compression reversed July’s widening and likely overstated underlying softness. How firms pass tariff-related costs to consumers will be key for the Fed’s policy path.
US inflation firmed in August, with headline CPI rising 0.4% and core CPI up 0.3%, both in line with forecasts, pushing annual gains to 2.9% and 3.1%. Goods prices accelerated, led by cars, apparel, and appliances, partly reflecting tariffs, while services inflation remained sticky, with notable increases in airfares, hotels, and shelter costs. Some relief came from softer medical care, recreation, and car rentals, but overall inflation pressures continue to linger.
Consumer sentiment fell to 55.4, below expectations and near lows last seen in April 2025 and 2022, as households reported deteriorating views on business conditions, labor markets, inflation, and personal finances. Inflation expectations held steady at 4.8% for the year ahead but ticked higher long-term. Weak employment readings, comparable to 2009 levels, underscored growing concerns about job security. Despite some optimism on real income growth, future expectations remain the main drag on sentiment. Markets responded modestly, with the S&P 500 and Nasdaq slightly higher, the Russell 2000 lower, and Treasury yields edging up.
All eyes now turn to next week’s FOMC meeting, where the Fed is widely expected to cut rates by 25 bps. Investors will focus on Chair Powell’s tone and the updated SEP projections for guidance on the pace and scope of future policy easing.
Friday’s Close (Weekly Performance)
S&P 500 6,584.29 (+1.59%)
Nasdaq 22,141.10 (+2.03%)
Dow Jones 45,834.22 (+0.95%)
Thank you Blue Room Senior Analyst NICK PEART.
10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.
These materials do not purport to be all-inclusive or to contain all the information that a prospective investor may desire in considering an investment. These materials are intended merely for preliminary discussion only and may not be relied upon for making any investment decision. Any discussion or information contained in this presentation does not serve as a receipt of, or as a substitute for, personalized investment advice from Blueroom or your advisor.
This publication does not constitute an offer to sell or a solicitation to buy any securities in any fund, market sector, strategy or any other product. Investing is speculative and involves substantial risks (including, the risk of loss of the investor’s entire investment). Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable.
For more information about us and our general disclosures contact us directly.