To The Moon

$NASDAQ(.IXIC)$ recovered 1.56% after fourth consecutive losses. How will market move after the rebound? Will market rebound continue or another decline is looming? Let’s look at the key factors affecting market trend in August.

Bullish Factors

1) Goldman Sachs stays optimistic amid August market dip and forecasts 8% increase in S&P 500 by year-end

The US stock market experienced a decline in August after a 21% increase in the first seven months of the year. However, Goldman Sachs remains optimistic, citing a reduced likelihood of an economic downturn and reasons for a positive market sentiment.

Goldman Sachs projects that the $S&P 500(.SPX)$ will reach 4700 points by the end of the year, indicating an approximate 8% increase from the current level. The bank's strategists conveyed that the weak performance in August need not be a cause for concern.

Goldman Sachs identifies share buybacks, retail investor sentiment, and fund inflows as factors supporting their outlook for further stock market gains.

2) Market is betting on Nvidia’s earnings

$NVIDIA Corp(NVDA)$ is scheduled to announce its second-quarter earnings after the US stock market closes on Wednesday (23rd). Investors anticipate that NVIDIA's revenue for the quarter will exceed expectations.

According to Refinitiv data, Wall Street estimates that NVIDIA's revenue for the current quarter (Q3) will grow by approximately 110% to $12.5 billion. Over the past two years, NVIDIA has only reported earnings below expectations once.

Last time, $NVIDIA Corp(NVDA)$ stellar earnings drove the AI sector and broader market up.

Bearish Factors

1) Strong retail sales and GPD forecast fuels rate hike possibility

The Atlanta Fed's GDPNow tool estimates a 5.8% growth in US GDP for the third quarter. If realized, it would be the fastest growth rate since 2014. However, Goldman Sachs and J.P. Morgan predict a growth range of 2.2% to 2.5%.

Strong consumer spending has become a cornerstone of resilience in the US economy. July's retail sales surged by 0.7%, and wage growth has bolstered purchasing power for American households. The job market continues to demonstrate strong demand, with the unemployment rate remaining close to its lowest level in nearly half a century, at 3.6%.

2) Powell has no reason to express dovish signal

Lindsey Piegza, Chief Economist at Stifel, stated last week, "How long does the Fed need to maintain rates at this elevated level? I think that's the focus of Powell's speech at the Jackson Hole conference."

Jackson Hole Is Jerome Powell's Big Moment. What to Expect From His Speech. - Barrons

Although the US has been a standout performer among major economies, a recent survey found that two-thirds of 602 US respondents believe the Fed has not yet overcome inflation challenges. The US benchmark 10-year Treasury yield is at a high of 4.33%, driven by expectations that central bankers globally have not completed their rate hike cycle.

According to a report from MUFG, recent data, including July's retail sales, indicate consumer resilience. This suggests that Powell has "almost no reason" to become more dovish at the Jackson Hole conference.

Which side do you take?

Will market continue its rebound or make another low?

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