Walk, don’t run, to the next stock-market record. That looks to be the order of the day as the S&P 500 appears to have 2,900 in its sights, but only just.
Making it tough for the index, which tapped that big level on Tuesday for the first time ever, is the fact that a long holiday weekend is looming.
Plus we’re about to roll into September, which is bursting at the seams with potentially market-moving events — more trade deadlines, a potential U.S. government shutdown and another Fed meeting, for starters — that could keep investors nervous. Never mind that September historically has been a pretty tough month for stocks.
Read: As S&P 500 rises to a record, these laggards are expected to come roaring back
With that comes our call of the day, which cautions against investors dipping a toe in stocks right now. “If the best trade is buying weakness and selling strength, no matter how safe 2,900 feels, this is definitely the wrong time to be buying,” writes CrackedMarket blogger Jani Ziedins.
He says chasing prices higher is a bad idea because a big chunk of the upside for stocks has already been seen, and the risks of a “normal and healthy dip” rise with every point.
“In fact, if the best trade is buying weakness and selling strength, this is actually a darn good time to start thinking about locking-in profits. Remember, we only make money when we sell our winners and it is impossible to buy the next dip if we don’t have cash,” says Ziedins, who adds that he’s still upbeat on the medium-to-long term and looking for a rally into the year-end.
Here’s more measured advice from Jeremy Glaser, a senior director at Morningstar. Wall Street’s record run is no time to panic, he says, but “could be a good opportunity to double check that your portfolio is in good shape in case a downturn is in the cards.”
The market
With an update of GDP data on the way, Dow YMU8, +0.02% S&P 500 ESU8, +0.07% and Nasdaq NQU8, +0.18% futures are flat, after the S&P SPX, +0.03% and Nasdaq COMP, +0.15% closed at records for a third straight session on Tuesday. Gold GCU8, -0.43% is slipping and the dollar DXY, +0.16% is up, along with crude US:CLU8 Bitcoin BTCUSD, -0.10% has firmed up.
Plus: Gas prices are set to drop as summer driving season ends
Overseas, Europe SXXP, +0.11% is tilting lower (though Zara parent Inditex ITX, -5.94% is getting hammered), while Asia markets ADOW, +0.40% closed higher.
The economy
A revision to second-quarter GDP is coming at 8:30 a.m. Eastern Time, followed 90 minutes later by pending home sales.
Read: Another inflation gauge is set to enter the red zone, but no worries at the Fed
The chart
The performance gap between U.S. and eurozone stock markets keeps widening, with the U.S. doing better. But don’t get tempted onto the continent by thinking it’s a good deal, cautions a team of equity strategists led by Mislav Matejka at J.P. Morgan Cazenove, in a recent note.
Matejka reasons that the eurozone is still trading at an “outright premium” to the U.S. on a price/earnings metric, and some big-picture factors, such as the fuss over Italy’s budget, making the team cautious going forward. He backs that up with a couple of charts. The first lays out how sour it is gotten for eurozone stocks lately:
J.P. Morgan Cazenove
But the second shows how really, on that P/E basis, eurozone stocks still aren’t that cheap:
J.P. Morgan Cazenove
The buzz
Weed is on a roll lately. Canada-based producer Tilray TLRY, -3.63% is soaring after doubling second-quarter sales, and it looks like the next big thing could be weed beer.
Amazon AMZN, +0.27% reportedly plans to challenge Roku ROKU, -1.73% with an ad-supported free video app. Shares of the e-commerce retailer are up this morning, but Roku is taking a bit of a hit.
Opinion: Stocks in these 5 tech hardware companies should keep flying high
If Democrats win the midterm elections and control of Congress, it will be a “miserable two years” and plenty of violence, POTUS reportedly warned a group of evangelical Christian ministers. In Florida, Donald Trump’s backing turned things around for Rep. Ron DeSantis, who won the Florida GOP primary for governor.
The quote
“Not cheap, by any metric, even when compared with Ferrari RACE, +1.44% ”—That was Evercore analyst Arndt Ellinghorst on the estimated 5 billion pound ($6.4 billion) valuation for luxury car maker Aston Martin. The maker of James Bond’s ride on Wednesday announced plans for a London listing.
He didn’t even get to the price of the actual cars.
Random reads
The death toll in Puerto Rico from Hurricane Maria is 50 times higher than previously thought
Teenage drinkers and smokers are headed for heart disease and stroke
Arizona residents annoyed over Alphabet’s self-driving cars
Tossing a MAGA hat and slapping teacher gets student arrested
Man’s $164,941 heart-attack bill goes viral, gets dramatically reduced
L.A. “shook” by a 4.4-magnitude quake
Earthquake???
*checks Twitter*
Yup. Earthquake.
— Alex Shibutani (@AlexShibutani) August 29, 2018
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