Retail sales data released this week shows that the American consumer still has a desire to spend despite calls of a coming recession. On Thursday, it was revealed that core retail sales were up 0.5 percent over the past month compared to expectations for a 0.1 percent increase.
Overall retail sales were up 0.4 percent over the past month compared to expectations for an increase of 0.3 percent during that time period. Core retail sales for August were revised upward to 0.2 percent. Ultimately, these figures have convinced some economists that the Fed shouldn’t follow through with further rate cuts in November or December.
As late as last week, it was assumed that at least one 25-basis point cut was coming in November or December. In fact, some were calling for cuts at both meetings to close out the year. However, some argue that it’s silly to cut rates when stock markets, job growth and other economic conditions are strong.
On the other hand, some argue that the economy is only doing well because of the belief that rates are coming down. Ultimately, failing to follow through on that promise would cause the economy to soften.
Also on Thursday, unemployment claims data for the last seven days was made public. During that period, there were 241,000 claims for benefits, which was exactly what analysts expected prior to the release. This was down from 260,000 claims last week in the immediate aftermath of Hurricane Milton.
The S&P 500 closed the week at 5,865, a gain of 0.85 percent for the week. On Wednesday morning, the index made a low of 5,804 before reversing and gaining ground the following two days. On Thursday, the market made its high of the week when it hit 5,878.
The Dow was up 0.96 percent this week to close at 43,276. On Tuesday, the market made its low of the week when it dipped to 42,692 and would make its high of the week on Friday when it briefly went about 43,300.
Finally, the Nasdaq closed the week at 18,489, a gain of 0.69 percent since Monday. On Monday morning, the market made its high of the week at 18,547 while it would make its low of the week on Wednesday morning when it hit 18,214.
In commodity news, gold hit a new record high, surpassing $2,700 an ounce this week. It has increased nearly $700 an ounce since hitting a yearly low in February. Concerns about a possible recession, tensions in the Middle East and other factors have combined to make the commodity a popular alternative investment over the past several months.
International markets experienced periods of volatility this week as several countries released important economic news. On Thursday night, Great Britain revealed that retail sales increased 0.3 percent on a monthly basis compared to an expected drop of 0.4 percent. On Thursday morning, the European Central Bank (ECB) announced it was cutting its main interest rate from 3.65 percent to 3.4 percent. On Tuesday morning, Canada announced that CPI went down by 0.4 percent on a monthly basis and was currently sitting at 2.1 percent on an annualized basis.
The American market will be light on news next week, which may allow market participants a chance to breathe and assess their positions headed into the end of the year. It will also give them a chance to craft a plan for what they might do depending on the results of the upcoming elections. The only major news on the schedule includes the release of the Flash Manufacturing PMI and Flash Services PMI in addition to unemployment claims data all on Thursday morning.