And that’s it for August trade. A tough one for tech stocks in America which were made to rally and naught else. And yet not.

September is traditionally the worst month for equities. Thought we might just get that one out there.

With a gain of 2.5% for the week, the S&P 500 index logged its best week in more than three months.

Over on the Dow Jones it was a +1.4% kinda week and the Nasdaq Composite surged +3.3%.

These gains marked their best respective runs in two months.

The tech-heavy Nasdaq has risen circa 35% so far in 2023, outperforming both the Dow and the S&P 500.

Hero of the dish last week was Dell Technologies.

I’m sure we all quite like Adele:

You all remember having a Dell at one stage, right?

 

Anyhoo. Dell’s stock lurched from the grave and went on a rampage, Saturday morning Sydenham time, after the computer maker said it was lifting its FY forecast for both revenue and profit thanks very much to the penchant for anything scarcely connected to the Artificial Intelligence (AI) frenzy as well as some steady demand for its various bits of computer hardware and server products.

By lunchtime Dell shares were ahead by 25%, with the YTD gains closer to 70%.

Wall Street traders have been itching for any opportunity to splash some cash on the Nasdaq Composite, with OFC, a strong preference for anything mega-cap-ish. And although not among either the Magnificent 7 nor the tech FAANG names, Dell rates as a card-carrying member of the wider tech clique.

Throughout July and August the NYSE FANG+ Index (consisting of highly-traded growth stocks and tech-enabled companies such as Facebook, Apple, Amazon, Netflix, and Alphabet’s Google) corrected -13% before reversing on cue, however after just three weeks the picture has clearly changed with the index retracing over half of the decline and it’s now only 5.7% below July’s all-time high.

“The Bears might be the most vocal but they’ve been losing the arm wrestle with the more muted Bulls all year,” according to James Gerrish from Market Matters. “With central banks looking more and more like they’ve reached the pinnacle of their rate hiking cycle it’s becoming increasingly easy to comprehend the rate-sensitive sector rallying to an all-time high into Christmas.”

“We remain bullish on the FANG+ Index (tech) initially targeting the ~8500 area, or 8% above Friday’s close.”

However, MM says, it’s “more likely to reduce our tech exposure into such strength above the recent July high,” than chase such a breakout.

Their advice sounds pretty sensible: “Plan your trade and trade your plan.”

Back in Q4 of 2022, MM positioned their portfolios very overweight in the Tech sector.

“Targeting the move that has unfolded through 2023 anticipating investors would focus on ‘peak rates’ but one of our current views is this move is maturing fast as valuations/optimism become stretched towards the Goldilocks scenario i.e. inflation under control while a recession is avoided.”

The Dow Jones ended the month down -2.5%, the S&P 500 fell -1.8% and the Nasdaq Composite benchmark – the Nasdaq 100 – walked itself back by -1.6%.

And yet… when Wall Street closed overnight for final session of a nutty month, it was tech names holding all the top spots on Wall Street’s three main biggest monthly gainers list.

Wall Street’s tech-led August

On the Dow Jones top spot was snatched by Cisco Systems (CSCO), with a modest gain of just over 10%. Not heaps, but enough to snag first place for August as well as the hardware maker’s best month in more than a year – largely thanks to a surprise quarterly beat.

Over on the broad based S&P 500 it was Arista Networks (ANET) snagging pole for August with a 26% rise, after late-in-the-month earnings which included strong beats on analyst expectations.

ANET busts out networking hardware for data centres with Messrs Microsoft (MSFT) and Meta (META) among its biggest clients. The thinking is ANET will do well on the back of, sigh, the artificial intelligence hysteria.

Shares in Arista were sold down as well in the weeks leading up to August on fears the big two spenders were about to pull their heads and wallets in data-centre spend.

The exciting bit here for fans of Aussie software makers is that Atlassian (TEAM) led the Nasdaq’s benchmark index for August, up about 12.5%, following a positive quarterly featuring higher earnings on stronger revenue.

The company Mike and Scott made says growth will gradually accelerate as users migrate from data centres to Atlassian’s growing cloud segment.

“Our base case view is that by the November FOMC meeting, the economy will have shown clear signs of slowing, leading the Fed to finally put an end to its sharpest rate hike cycle since the 1980s,” UBS wrote on Tuesday morning Sydenham time.

“We expect US Treasury yields to fall by year-end as both US economic growth and inflation moderate.”

Right now in the US the Futures are mixed, although a holiday-shortened week might help maintain the absurdly positive momentum, even into the first week of soggy September.

Futures tied to the Dow Jones Industrial Average are down -0.1%.

S&P 500 futures are flat, while Nasdaq 100 futures have crept +0.1% higher.

ELON WATCH

Uh-oh. Tesla (TLS) is facing x2 new federal investigations.  One is over what Tesla’s been talking up about the range of its EV batteries; the second, according to The Wall Street Journal, is about Elon’s (and therefore Tesla’s)  possible misuse of company resources.

What resources exactly? Is Elon secretly buying up all the Doge Coin in Dogetown? Not quite.

According to the WSJ, Manhattan federal prosecutors alongside mates at the Securities Exchange Commission are digging for data about what Tesla really splurged on some ‘secretive plan to build a spacious glass house’ near Austin, Texas.

The apparent thinking is that the mysterious glass project is in some way, and in some terrifying unknowable way, entirely for Musk’s own, likely deranged personal use.

And also courtesy of the WSJ, a snifter of a new biography on The Elon by Walter Isaacson, due out pretty soon:

The way that Musk blustered into buying Twitter and renaming it X was a harbinger of the way he now runs it: impulsively and irreverently. It is an addictive playground for him. It has many of the attributes of a school yard, including taunting and bullying. But in the case of Twitter, the clever kids win followers; they don’t get pushed down the steps and beaten, like Musk was as a kid. Owning it would allow him to become king of the school yard.

Looks fun.

Elon and Israel

And just following up on the trouble our man was brewing for himself we touched on in our previous Elon Watch…

The once Twitter, now X boss has rather reluctantly decided to sue the Anti-Defamation League.

That’s a tough one to spin.

Elon’s alleging that the league – whose very raison d’être is to call out and confront antisemitism, extremism and bigotry – is guilty of calling out and confronting Elon and X of being antisemitic, extremist and (by inference) a bigot.

Musk also blamed the ADL for X’s falling US advertising revenue.

And they’re Rebalancing in New York

Changes are afoot as the Dow Jones quarterly rebalance sees Blackstone (BX) and Airbnb (ABNB) winning the swipe card to the executive loos on the S&P 500, replacing Lincoln National Corp. (LNC) and Newell Brands (NWL). The switch is effective ahead of trading on Monday, September 18.

Other swipe card winners of particular note – the farming equipment maker Deere & Co (DE) cuts its way into the S&P100, tossing out Walgreens Boots Alliance  (WBA).

US Earnings Spotlight

Tuesday
Intuit Inc (INTU), Zscaler (ZS), HealthEquity (HQY), and Asana (ASAN)

Wednesday
Dave & Buster’s Entertainment (PLAY), UiPath (PATH), GameStop (GME), American Eagle Outfitters (AEO), and C3.ai (AI)

Thursday
Smith and Wesson Brands (SWBI), DocuSign (DOCU), Guidewire Software (GWRE), Smartsheet (SMAR), and Planet Labs (PL)

Friday
Kroger (KR) and Rent the Runway (RENT)

 

The US Economic Calendar

Monday September 4 – Friday September 8

 

Monday
United States, Canada Market Holiday

Tuesday
United States Factory Orders (Jul)
Worldwide Services, Composite PMIs, inc. global PMI
(Released across 5-6 Sep)
ASEAN S&P Global Manufacturing PMI (Aug)
Eurozone PPI (Jul)

Wednesday
United States Trade (Jul)
United States ISM Services PMI (Aug)
United States Fed Beige Book
US, Europe S&P Global Sector PMI (Aug)

Thursday
China (Mainland) Trade (Aug)
Eurozone Q2 GDP (final)
United States Initial Jobless Claims
Worldwide and Asia S&P Global Sector PMI (Aug)

Friday
Japan Q2 GDP (final)
Canada Employment (Aug)
United States Wholesale Inventories (Jul)
Worldwide Metal Users and Electronics PMI (Aug)

 

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