📊 Weekly Market Update: The Fed Cut Express Gathers Steam
Another week, another set of records smashed on Wall Street. The S&P 500 and Nasdaq hit fresh all-time highs while markets positioned themselves for what's looking increasingly likely: a Fed rate cut in September. But it wasn't all smooth sailing - hot inflation data and geopolitical drama kept traders on their toes.
📊 What's Happening
Records Keep Tumbling
The S&P 500 closed above 6,400 for the first time ever on Tuesday, while the Nasdaq notched multiple record highs throughout the week. The broader market rally was fueled by Tuesday's inflation report showing consumer prices rose 2.7% year-over-year - exactly in line with expectations and not scary enough to derail rate cut hopes.
Small Caps Steal the Show
While mega-caps grabbed headlines, small-cap stocks absolutely crushed it. The Russell 2000 surged nearly 3% on Tuesday and Wednesday alone, finishing the week up over 3% - massively outperforming large-caps. Rate-sensitive smaller companies are betting big on cheaper money coming their way.
The Buffett Bounce
UnitedHealth got a massive lifeline when Warren Buffett's Berkshire Hathaway disclosed a $1.6 billion stake in the beleaguered insurer. Shares jumped 13% on Friday, marking the stock's best day since 2008. The healthcare giant has been the Dow's worst performer this year, down 40% amid federal investigations and rising medical costs.
Geopolitical Theater
The week ended with Trump and Putin meeting in Alaska - a highly anticipated summit that ultimately produced no breakthrough on Ukraine. The meeting lasted just three hours instead of the expected seven, with both leaders offering diplomatic pleasantries but no concrete ceasefire agreement.
🎯 Why It Matters
The Fed Put is Back
Markets are now pricing in a 96% chance of a September rate cut, up from around 85% before this week's inflation data. With core inflation at 3.1% and headline inflation at 2.7%, the Fed finally has cover to start easing without looking like they're panicking about the economy.
Economic Data is Mixed but Manageable
While Tuesday's consumer inflation was tame, Thursday's Producer Price Index came in hot at 3.3% year-over-year - the fastest pace in five months. This shows tariff pressure is building in the supply chain, but not enough to derail the rate cut narrative entirely.
💰 Opportunity
Rate-Sensitive Plays
With the Fed looking increasingly dovish, small-cap stocks, REITs, and utilities could continue their run. The Russell 2000's 3% weekly gain shows this trade is already underway.
Tech Momentum Continues
Despite some Thursday weakness, mega-cap tech keeps hitting new highs. The S&P 500's record closes were largely driven by technology names, and with AI infrastructure spending still accelerating, this trend has legs.
Healthcare Value Hunt
UnitedHealth's Buffett bounce highlights potential value in beaten-down healthcare names. With the Oracle of Omaha backing the sector, other healthcare stocks could see renewed interest from value investors.
⚖️ Bottom Line
This week proved the market's "buy everything" mentality is alive and well, but with some important caveats. The Fed rate cut story is driving most of the action, and as long as inflation doesn't spike dramatically, September easing looks like a done deal.
The small-cap surge and crypto rally show risk appetite is strong, while Buffett's UnitedHealth bet proves there are still value opportunities hiding in plain sight. However, hot producer prices and ongoing geopolitical tensions remind us that this market isn't bulletproof.
Key watch: Next week brings more Fed speakers and housing data, but the real test comes with August jobs numbers in early September. For now, the "Fed cut express" is full steam ahead, and markets are happy to ride along for the journey.
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Disclaimer: This article constitutes the author’s personal views and is for entertainment and educational purposes only. It is not to be construed as financial advice in any form. Please do your own research and seek advice from a qualified financial advisor. From time to time, I have positions in all or some of the mentioned stocks when publishing this article. This is a disclosure - not a recommendation to buy or sell stocks.