Low Market volumes ahead of Wednesday's Interest rate decision

The US Markets were generally flat on Monday ahead of the interest rate decision due this Wednesday. Volumes were soft. The VIX remains relatively muted and has held around 17 for a few days - it hit 65 intraday on 5 August, its highest level since Covid in 2020.

DJIA +0.55%, S&P 500 +0.13% and Nasdaq -0.52% (Mag7 -0.69%). On an equal weighted basis (our measure) the overall market was flat +0.09%. Breadth was 56% (vs 12% on 5 August and a high of the mid 80s% at the end of July) with generally soft daily volumes of 7.1b (the average daily volume over the last year of 7.9b).

One day returns as follows - equal weight basis: Mag7 -0.69% (META +1.8%, AAPL -2.8%, NVDA -2%), large +0.57%, medium +0.62%, small +0.24% and micro -0.28%. On a 1 and 2 week equal weight basis; Market +3.6% and -0.6%, Mag7 +5.2% and +0.6%, Large caps +2.5% and +0.3%, Medium cap +3.7% and flat, small cap +4.3% and -0.6% and finally Micro cap +3.4 and -1.1%.

Our risk monitor remains in favour of the larger cap stocks. Small and Micro stocks performed poorly following the July nonfarm release, although as fear subsided they recovered strongly through the middle of August. Interestingly the Small and Micro stocks held up fairly well relative to Large post the August nonfarm figures and Micro have actually outperformed Large stocks over the last week though the Micro stocks were weak on Monday signalling caution ahead of the Fed decision.