Market Perspective for October 6, 2024

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The first few trading days in October were eventful as the nonfarm payroll reports were released on Wednesday and Friday. According to the ADP report, there were 143,000 jobs added to the economy in September compared to an expected 124,000. However, that number paled in comparison to the figure released on Friday.

According to the Bureau of Labor Statistics (BLS), there were 254,000 jobs added to the economy in September compared to an expected 147,000. The jobs figures for July and August were also revised higher. Furthermore, it was reported on Friday morning that the unemployment rate had dropped to 4.1 percent while average earnings on a monthly basis increased by .4 percent.

The unemployment rate had been expected to remain steady at 4.2 percent while the average hourly earnings were expected to be just .3 percent. While these figures have caused some to question whether the Fed needs to continue cutting rates in the future, the market believes that additional cuts are still coming. The current bet is that the Fed eases by 25 basis points in November while also easing another 25 basis points in December.

This would bring the key rate down to a range of 4 percent to 4.5 percent and would put the Fed about 100 basis points from what the market sees as a neutral rate. The main argument made by proponents of rate cuts is that the Fed needs to be proactive to guard against shocks that might be caused by geopolitical or other events.

There was other important news released over the past few days. On Monday, Fed Chair Jerome Powell spoke at an event in Nashville and said that further rate cuts will be data-dependent. He also said that there was no hurry to continue cutting and that the economy was projected to remain strong.

On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) was released, and it revealed that there were 8.04 million openings in the United States. This was compared to an expected 7.64 million openings. Also, the ISM Manufacturing PMI came in at 47.2 compared to an expected 47.6, which indicates that manufacturing is still in a period of contracting demand.

On Thursday, the ISM Services PMI came in at 54.7 compared to an expected 51.7. This continues a trend in which manufacturing demand is contained while demand for services keeps growing. Unemployment claims figures for the past seven days were also released the same morning and found that there were 225,000 requests for benefits compared to an anticipated 222,000.

The S&P 500 was mostly flat for the week finishing up .31 percent to close at 5,751. It made its high of the week on Monday afternoon hitting 5,760 before reversing and making a low of 5,680 on Thursday. The index turned higher on Friday after the nonfarm payroll report was released.

The Dow was also flat this week, finishing up .37 percent to close at 42,352. The market would close at the high of the week and made its low of 41,908 on Thursday afternoon.

Finally, the Nasdaq was up .2 percent for the week to close at 18,137. The weekly high of 18,153 was hit at the open on Tuesday while the weekly low of 17,797 was also hit on Tuesday morning.

In international news, the Swiss government reported on Thursday morning that inflation was down .3 percent on a monthly basis. On Monday night, Australia reported that retail sales were up .7 percent monthly, compared to an expected .4 percent.

On Wednesday, the meeting minutes from the September FOMC gathering will be released. This will give investors greater insight into what the committee is thinking going forward. Thursday, inflation data will be made public, and it’s expected that the inflation rate will fall to 2.3 percent on an annualized basis. On Friday, price data is set to be released with prices expected to have increased .1 percent over the past month.

Market Perspective for September 29, 2024

Market Perspective for September 29, 2024

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The final full week of September contained several significant announcements that provided volatility. On Monday, Flash Manufacturing PMI and Flash Services PMI numbers were released. The manufacturing PMI came in at 47 percent, which was below the expected 48.6 percent and indicates that the sector is still in a period of contraction.

Meanwhile, the services PMI came in at 55.4 percent, which was roughly in line with expectations. It shows that the services sector is still in a period of expansion, which may help to stave off a recession or reduce its severity.

On Tuesday, the CB Consumer Confidence report was released and came in at 98.7. This was compared to the expected 103.9 and was a significant drop from last month when the report came in at 105.9. This could be a sign that services and retail spending may drop in the coming months or at least experience a period of softness in the final quarter of the year.

On Wednesday, it was revealed that there were 716,000 new home sales in August, which was lower than the month before but higher than the expected 699,000 sales. Mortgage rates are expected to remain closer to 6 percent over the next few months with some more easing possible. This is expected to get some sellers off the sidelines, increasing inventories.

On Thursday, a couple of data points related to the nation’s gross domestic product (GDP) were released. First, the final GDP report for the second quarter found that the economy grew by 3 percent, which matched analyst expectations. The final GDP price index came in at 2.5 percent, which was also what analysts expected. This figure calculates the change in price of goods and services that make up the GDP calculation.

It was also revealed that durable goods orders were flat on a monthly basis compared to an expected drop of 2.8 percent. Core durable goods orders were up .5 percent on a monthly basis compared to an expected increase of .1 percent. Finally, unemployment claims for the past week revealed that 218,000 claims for benefits were made during that time period compared to an expected 222,000 requests.

Finally, on Friday, the Core PCE Price Index was up .1 percent on a monthly basis. This was lower than the .2 percent increase expected before the release, and it is seen as another data point showing inflation coming under control.

The Dow was up 232 points to finish at 42,313, which is near the all-time highs that the market set this week. The high of the week occurred on Friday morning when the market reached 42,617 while the low was on Wednesday morning when the index dipped to 41,911.

The S&P 500 finished the week up 21 points to close at 5,738, which is also near the market’s all-time high of 5,760 set this week. On Tuesday, the market made its low of the week of 5,705 before reversing and climbing to its weekly and all-time high on Friday afternoon.

Finally, the Nasdaq also finished the week higher gaining 142 points to close at 18,119. The market would hit its low of the week on Tuesday when it fell to 17,894 and it would make its weekly high of 18,292 on Thursday afternoon.

In international news, Canada announced on Friday that its GDP grew .2 percent on a monthly basis. On Thursday morning, the Swiss central bank announced that it was going to reduce the country’s interest rate by 25 basis points to an even 1 percent. On Tuesday, Australia announced that it was holding its key interest rate steady at 4.35 percent.

The upcoming week will be another interesting one as the nonfarm payroll reports for September are released on Wednesday and Friday. The ADP report is expected to say that 124,000 jobs were created while the Bureau of Labor Statistics (BLS) is expected to say on Friday that 144,000 jobs were created during that time. The ISM Manufacturing PMI will be released on Tuesday while the ISM Services PMI will be released on Thursday. Finally, the Job Openings and Labor Turnover Survey (JOLTS) report is set to be released on Tuesday morning.