Adam Turnquist, CMT, Chief Technical Strategist, LPL Financial
The winning streak for stocks continued in August, as the S&P 500 posted its fourth consecutive month of gains. It was an informative month for investors, as we learned that the labor market may not be as solid as expected, tariffs have had a minimal impact on inflation and margins thus far, corporate America and the consumer remain resilient, and the Federal Reserve (Fed) is likely ready to cut rates later this month. This backdrop propelled the broader market up nearly 2% last month and to its 20th record high of the year on Thursday. Friday’s inflation report revealed that consumer spending rose in July despite a slight acceleration in the year-over-year core Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation gauge. The mostly in-line report had a minimal impact on rate cut expectations, with the fed funds futures market implying nearly a 90% probability for a 0.25% rate cut this month. However, the upcoming payrolls report on Friday could move the needle; anything hot on payroll gains could throw some cold water on rate cut estimates.