S&P 500 Index Near All-Time High Amid Selective Market

The S&P 500 Index closed Thursday just under 1% from its August all-time high, but beneath the surface, the market was more selective. Broadcom dropped 2.75% on disappointing Q3 earnings, while crude oil futures pushed towards $88, up over 2%. The US dollar versus Japanese yen fell by more than 2%, with speculation of BOJ intervention and a potential hike.

Wall Street economist Waller expressed support for holding interest rates at the current level, but this did little to alleviate concerns about a rate hike. A strong August non-farm payroll report could make a September hike nearly unavoidable, while a third consecutive weak print against elevated PCE would be a stagflationary signal.

The yen's surge was mechanical, driven by BOJ hike expectations that raised the cost of borrowing in yen, forcing liquidation of carry-funded dollar positions. Consumer Discretionary and Airlines stocks were among those affected, with Amazon, Nike, and Tesla also absorbing selling from carry unwind and rate fear.