Fed cut chatter builds: winners rally, losers bleed

Winner — Apple (+$468.10 / +3.25%)
Apple surged after a federal judge ruled that Google may continue its multibillion-dollar default-search deal with Apple, a ruling that lifted a key regulatory overhang and pushed Apple stock about 3.8% higher on Wednesday. That deal, valued at $20 billion annually, remains intact—analysts called the outcome “very bullish” and preserved a vital revenue stream for Apple. Investors dialed in on corporate resilience rather than Fed flair.

Loser — GitLab (–$213.00 / –4.19%)
GitLab posted strong Q2 results—$236 million revenue up 29.2% YoY and $0.24 non-GAAP EPS, beating estimates by a wide margin. But Q3 revenue guidance of $238–239 million came in below estimates (~$241.5 million), and the CFO’s announced exit heightened uncertainty—sending the stock down roughly 8–10% on Thursday. Turns out, the market demands tomorrow’s promise even when yesterday’s numbers were stellar.

You know optimism’s running hot when Wall Street celebrates record highs while a court ruling revives the tariff wildcard.

What's new:
What’s new this week: U.S. equities climbed to fresh all-time highs on Thursday, powered by weakening labor data that dialed up bets on Fed rate cuts. But the optimism feels soft: a federal appeals court deemed most of Trump’s tariffs illegal, injecting fresh ambiguity into trade policy, fiscal dynamics, and corporate planning.

Scorecard:
S&P 500 up to new highs, marking its 21st closing high of the year—finishing Thursday up ~0.8%, close-to-close, based on preliminary figures. Bond yields played their part in the rally: the 2-year Treasury yield dropped to ~3.59%, and the 10-year dipped to ~4.18%—moves that widened the yield curve. Market breadth rebounded sharply on September 4: 67.3 % of stocks advanced—more than twice Tuesday’s weak 27.3 % reading.

Receipts:
Labor softness: August payrolls rose just 22k, unemployment hit 4.3%—highest since 2021—pushing Treasury yields lower. Yield reaction: The 10-year slipped to ~4.18%, the 2-year to ~3.59%, reflecting cut bets. Tariff ruling: A federal appeals court found most Trump-era tariffs illegal, reviving trade policy risk. Valuations: S&P 500 forward P/E at 22.4× vs 15.9× long-term average, per LSEG.

Why it matters:
Markets are clearly dancing to the tune of Fed expectations—pushback from inflation or labor surprises could derail that fragile optimism. Legal whiplash on tariffs reignites trade policy uncertainty—even the rumor of reinstatement is enough to dissuade capital allocation. Elevated valuations amplify risk: even modest shifts in earnings or sentiment could cause outsized gut swings—reflexivity, meet reality.

Global funds — Liquidity flood: Equity funds saw $10.6B of inflows this week, with $1.9B into tech and $57.6B parked in money markets. Rate-cut expectations have investors chasing momentum again.

Amazon — Kuiper goes airborne: Shares jumped 4.3% after JetBlue signed on as the first airline customer for Amazon’s satellite-based Project Kuiper internet, promising 1 Gbps speeds starting in 2027. Not every tech moonshot finds a runway, but this one did.

Tech funds — Inflows surge: U.S. tech funds pulled in $1.2B, the biggest in three weeks, while money-market funds gained $53.5B. Bubble chatter always follows the cash.

Gulf — Markets diverge: Saudi’s index inched +0.3%, its first gain in nine sessions, while oil fell 1.5%. Traders are squaring carry optimism with crude fatigue.

Copper — Output cuts ahead: JX Advanced Metals plans to trim tens of thousands of tons of electrolytic copper production in fiscal 2025 and will scale down its 450,000-ton smelting capacity by March, citing squeezed margins. When producers pull back, markets shift gears.

Rupee — Relief bounce: The Indian currency closed near ₹88.10/USD, off record lows of ₹88.33, as softer U.S. data fed Fed-cut hopes. A small win, but still on thin ice.

Fed — Cut chatter builds: Futures now price up to a 10% chance of a half-point cut, with rates seen at 3.25%–3.50% by January. Traders are already daydreaming about Powell blinking.

That’s the wrap for this week’s market movements. We’ll be back next week with more updates on our live portfolio.

Until then, happy investing!
— The Investogy Team, Kätlin & Siimon

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