Ella 
On Tuesday, the S&P 500 hit a record high for the 38th time this year. Financial reports showed that second-quarter trading revenue of large banks jumped nearly 20%, driving a rebound in banking stocks. Investment banking revenue also rose sharply due to increased trading volume. The Nasdaq index, which has a large proportion of technology stocks, rose slightly. On the other hand, the Russell 2000 index rose another 3.5%, suggesting that a sector rotation from Big Tech to other sectors is taking shape. As a result, the Russell 2000 is up more than 10% since last week, while the S&P 500 equal-weighted index has risen faster than the technology-heavy normal-weight index. Despite better-than-expected U.S. retail sales and a jump in the Atlanta Fed’s forecast for gross domestic product (GDP) to 2.5%, none of this has dampened expectations of a rate cut from the Federal Reserve.
Activity in Fed Funds futures suggests that the market is now pricing in a 100% chance of a September rate cut (the odds of a 50 basis point cut are rising — but absent severe shocks/stress, this possibility Sex is irrational). Yesterday’s retail sales numbers and sales in the hours leading up to Amazon Prime Day (which climbed nearly 12% compared to last year) don’t necessarily support the Fed’s dovish forecasts. But the Fed’s dovish forecasts are gaining momentum and the machine is running, and it’s hard to stop.
