Stock Rally Momentum Halts – US Market Wrap

Stocks struggled to gain traction after a furious rally brought the market within striking distance of its all-time highs.

A drop in stocks halted what would have been the S&P 500’s longest winning streak in 20 years. In stark contrast to the “extreme negative momentum” during the panic selling in early August, “euphoria” has set in. In just eight days, the US equity benchmark rose nearly 8%, with positioning returning to extended levels. Citigroup reported that nearly $16 billion in new long bets were added to S&P 500 futures last week.

In another sign that bullishness has gone into overdrive, Bank of America clients invested $2.7 billion in US equities during the best week of the year for the S&P 500 Index, with inflows led by so-called smart money. And Goldman Sachs Group said so-called trend followers are “no longer a headwind” and are expected to buy equities this week, regardless of market movements.

The S&P 500 dropped below 5,600. Nvidia, which had rallied nearly 25% in six days, led losses among megacaps. Bank of America fell as Warren Buffett’s Berkshire Hathaway sold more shares. Lowe’s lowered its full-year guidance. Netflix surpassed its previous record.

Treasury 10-year yields fell six basis points, to 3.81%. The loonie trailed most of its major peers as inflation in Canada fell, cementing rate-cut bets. Oil prices remained stable as traders monitored developments in the cease-fire talks for the Gaza conflict.