A quiet day in the US markets with large cap stocks pushing the indices higher

The US Indices were all ahead on Wednesday, the Mag7 lagged and the market was pushed higher by Large and Mid cap stocks. The market advance was evenly split. The VIX was flat at 21 - it hit 65 intraday on 5 August, its highest level since Covid in 2020. The main indices were; DJIA +0.3%, S&P 500 +0.97% and Nasdaq +1.45% (Mag7 +0.02%). On an equal weighted basis (our measure) the overall market was flat. Breadth was neutral at 50% (range of 12% to 88% over the last six weeks) volumes were flat at 8b (the average daily volume over the last year of 7.8b and hit 15bn on Friday 8/20). 

One day returns as follows - equal weight basis: Mag7 flat (AAPL +1.7%, AMZN +1.3%), large cap +0.5%, medium cap +0.45%, small cap flat and micro cap -0.2%. On a 1 and 2 week equal weight basis respectively; Market -0.3% and +1%, Mag7 +1.5% and -0.1%, Large caps +0.1% and +2%, Medium cap +0.2% and +1.4%, Small cap -0.6% and +0.6% and finally Micro cap -0.3% and +0.7%. 

Our risk monitor remains in favour of the larger cap stocks. Small and Micro stocks have proved far more volatile than the Large and Medium cap stocks over the last seven weeks. Micro caps have underperformed the market by 18% over the last 12 months.

The sector bias favoured neither Bull or Bear sectors. Academic & Educational was the worst performer again yesterday after a very strong run recently. Basic Materials was the strongest sector pushed up by Aluminium and Speciality Chemicals. Reinsurance and Multiline were both up over 1% on the day helping to push Financials higher - a curious move considering Hurricane Milton. Consumer non-Cyclicals ended the day up, some markets comments regarding WW International (WW) and GLP-1 helped push that stock strongly ahead on the day. Fintech including Blockchain was weak again in the Tech sector though Communications & Networking and IT Services were both strongly up. Energy continues to partially reversing what has been a very strong four weeks for the sector,.

A notable number of 52 week highs in the following sectors: Consumer Cyclicals (Homebuilding & Supplies and Hotels & Entertainment), Financials (across the sector), Industrials (across the sector ex Transport) and Technology (Software & IT Services and Technology Equipment again).

Notable high volumes in Consumer Cyclicals (across the sector again), Industrials (across the sector) and Technology (Software & IT Services again)

After reassuring news regarding nonfarm payroll over the last week the focus will move to today's inflation numbers and Friday's consumer sentiment. The latter is probably the more important. At the back of every investors mind is the escalation in the Middle East and the possible bombing by Israel of Iranian oil assets and the fallout that this would create.