Key Takeaways
- "Smart Money" Sells U.S. Equities: Institutional investors offloaded $800 million net in U.S. equities last week, marking their fourth week of net selling in five weeks, with hedge funds contributing $400 million in outflows.
- JP Morgan Bullish on Gold: JP Morgan (JPM) forecasts gold prices to average $5,055 per ounce by late 2026, citing strong institutional and central bank demand, alongside anticipated Federal Reserve rate cuts.
- Government Shutdown Drags On: The U.S. government shutdown enters its 23rd day, with the Senate holding a test vote on a bill to pay essential federal workers, while House Democrats call members back to Washington for meetings next week.
- Tesla Shares Recover: Tesla (TSLA) shares saw a rebound, turning positive after an initial drop of up to 5.7%.
- EU Eyes Ukraine Defense Aid: EU Commissioner Andrius Kubilius hopes member states will utilize the €150 billion SAFE program to support Ukraine's defense industry.
U.S. equity markets are experiencing significant outflows from institutional investors, signaling a cautious sentiment among "smart money." Last week, institutional investors collectively offloaded a net $800 million in U.S. equities, extending a trend of net selling in four of the last five weeks. This selling pressure was exacerbated by hedge funds, which recorded $400 million in net outflows. Goldman Sachs also reported that hedge funds sold U.S. equities at their fastest pace since April.
In commodity markets, JP Morgan (JPM) has issued a highly bullish forecast for gold prices. The investment bank projects that gold could average $5,055 per ounce by the fourth quarter of 2026. This optimistic outlook is underpinned by expectations of sustained institutional demand, continued central bank purchasing, and the anticipated onset of a Federal Reserve rate-cutting cycle. Analysts at JP Morgan note that gold remains their highest conviction long-term investment recommendation, supported by factors such as stagflation anxiety and dollar diversification.
The U.S. government shutdown continues to be a dominant political and economic concern, now in its 23rd day. The Senate is currently taking a test vote on legislation aimed at paying essential federal workers, a measure that requires 60 votes to advance. Meanwhile, House Democrats are calling their members back to Washington, D.C., next week for an in-person caucus meeting and other events, as efforts to resolve the funding impasse intensify. The ongoing shutdown has led to political maneuvering, with Democrats largely expected to reject the GOP's essential worker pay bill, advocating instead for a comprehensive solution that pays all federal employees.
In corporate news, Tesla (TSLA) shares experienced a rebound today. After initially falling by up to 5.7%, the electric vehicle manufacturer's stock managed to turn positive, indicating a recovery in investor confidence. This rebound comes amidst broader market movements and specific company developments.
On the international front, European Union Commissioner Andrius Kubilius has expressed optimism regarding the €150 billion Security Actions for Europe (SAFE) program. Kubilius hopes that EU member states will leverage these loans to significantly bolster Ukraine's defense industry. This initiative is part of a broader strategy to strengthen European defense capabilities and support Ukraine's needs.
Additionally, White House Press Secretary Karoline Leavitt is scheduled to hold a press briefing today at approximately 13:00 ET. In other political developments, San Francisco Mayor Daniel Lurie announced that former President Donald Trump has canceled a planned federal deployment in the city. This decision follows strong opposition from California officials, including Governor Gavin Newsom, who had vowed to challenge any federal intervention.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.