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The second full trading week in September was quite consequential, as August’s inflation numbers were revealed. The Price Producer Index (PPI) was also released, which also provided some final clues before the Fed meets next week to make its latest rate decision. It’s likely that the Fed is going to cut the Funds Rate by at least 25 basis points.

This would bring it down to a range of 5 percent to 5.25 percent. It is also possible that the Fed decides to cut by 50 basis points to get ahead of potential weakness in the labor market. One of the Fed’s mandates is to create policies that lead to full employment. Therefore, it will feel compelled to act when the labor market is in any type of peril even if interest rates haven’t hit 2 percent.

On Wednesday, the August CPI revealed that inflation was 2.5 percent on an annualized basis. This result matched analyst expectations and was down from 2.9 percent a month ago. Overall CPI on a monthly basis increased by .2 percent, which was also in line with expectations. However, when food and energy costs were taken out, CPI actually rose .3 percent, higher than the expected .2 percent.

The fact that CPI minus food and energy prices came in higher than what was expected is fueling expectations that the Fed will go for a smaller rate cut. It is also expected that the Fed will cut rates again this year, which gives it additional opportunities to go large if necessary.

On Thursday, the PPI figures indicated that prices went up more than expected over the past month. On a monthly basis, overall PPI went up .2 percent while the core PPI went up .3 percent. It was believed that overall prices would go up .1 percent while core PPI would increase by .2 percent.

Unemployment claim data was also made public on Thursday morning. Over the past seven days, there were 230,000 requests for benefits, which was slightly higher than the 227,000 projected prior to the release, and it is also roughly in line with the 228,000 claims from last week.

On Friday, the University of Michigan released its preliminary consumer sentiment and inflation expectations report. Consumer sentiment came in at 69 percent, which was slightly higher than the expected 68.3 percent and higher than last month’s 67.9 percent. Inflation expectations came in at 2.7 percent compared to 2.8 percent last month. Essentially, this means that respondents think that inflation will be at 2.7 percent at this time next year.

The Dow finished the week up 1.51 percent to close at 41.393. The low of the week occurred on Wednesday morning when the market dipped to 40,026 while the high of the week of 41,505 was established on Friday afternoon.

The S&P 500 finished the week up 2.5 percent to close at 5,626. It would hit its low of the week on Tuesday when it dipped to 5,410 and would make a high of 5,632 on Friday afternoon.

Finally, the Nasdaq would finish the week up 4.14 percent to close at 17,683. As with the other two major indexes, the Nasdaq would make its low of the week on Wednesday and its high of the week on Friday. The low of the week was 16,802 while the high for the last five trading days was 17,699.

The upcoming week is going to be an interesting one both in the United States and around the globe. On Wednesday afternoon, the Fed will make its latest rate decision, which should be a rate cut of 25 to 50 basis points. Japan will also make its next rate decision late Thursday night or early Friday morning, and it is expected to keep its interest rate unchanged.

Also in the United States, retail sales data will be released on Tuesday while Fed Member Harker is expected to speak on Friday. Retail sales are expected to have dropped .2 percent overall on a monthly basis while core retail sales figures are expected to rise by .2 percent on a monthly basis.

The first full trading week of September provided some clarity as to the state of the economy and its impact on monetary policy. As expected, the nonfarm payroll report released on Friday indicated that hiring is slowing, which means that a rate cut is likely justified. The only question is whether the rate cut will be 25 basis points or 50 basis points.

Friday’s report released by the Bureau of Labor Statistics (BLS) revealed that the economy added 142,000 jobs in August. This was lower than the projected 164,000 new jobs added during that time period. It’s also worth noting that the report issued in August was revised to reflect that 89,000 jobs were added in July as opposed to 114,000 as originally reported.

This continues a trend in which initial reports overstate job gains only to be corrected in the weeks that follow. Although job gains were lower than expected, the unemployment rate ticked down to 4.2 percent, which was in-line with analyst expectations. Average hourly earnings on a monthly basis were up by .4 percent, which beat expectations of a .3 percent increase.

The day before, the ADP nonfarm payroll report indicated that 99,000 new jobs were created in August compared to an expected 144,000. Furthermore, the July job figure released on the final day of that month was revised downward to 111,000 from 122,000 as originally reported.

Also on Thursday, the ISM Services PMI was released and came in at 51.5 percent, which was close to the expected 51.3 percent. Unemployment claim data for the past week was also made public, and in the last seven days, there were 227,000 claims for benefits compared to an expected 231,000.

On Tuesday, the ISM Manufacturing PMI was released and came in at 47.5 percent, which was an increase from 46.8 percent a month ago. However, in the report itself, it was noted that the pace of new orders were slowing and that the pace of hiring was also sluggish. This would likely be seen as further evidence of a broader economic slowdown that could have an impact on how aggressive the Fed decides to be later this month.

On Wednesday, the JOLTS Job Openings report indicated that there were 7.37 million open positions across the United States. This was lower than the expected 8.09 million openings and was also lower than the 7.91 million openings reported a month ago. A lack of available jobs may also indicate that the economy is experiencing the warning signs of at least a mild recession.

The S&P 500 fell 3.6 percent this week to close at 5,408. On Tuesday morning, the index opened at 5,610 and would begin a freefall that lasted most of the week. It would hit a low of 5,403 on Friday morning before regaining some of the ground it had lost during the previous four trading days.

Like the S&P, the Dow finished the week in the red having lost 2.76 percent to close at 40,345. The Dow would start the week at its high and spend the rest of the four trading days losing ground. The weekly high for this index was 41,219 set on Tuesday morning while it closed the week at its lowest point.

Finally, the Nasdaq would finish the week down 5.22 percent to close at 16,690. As with the other two major indexes, the Nasdaq spent most of the previous four trading days in freefall. The weekly high was set on Tuesday morning at 17,566 while the low of 16,687 was set on Friday morning.

In international news, Switzerland reported on Tuesday morning that the monthly CPI figure had not gone up in August. Also on Tuesday, Australia announced its gross domestic product (GDP) had increased by .2 percent in the past quarter. On Wednesday, the Bank of Canada (BOC) announced that the country’s main interest rate was being reduced by 25 basis points to 4.25 percent.

On Wednesday, the CPI report will be released, and it’s expected that the inflation rate will have dropped to 2.6 percent on an annualized basis. On Thursday, the Price Producers Index (PPI) will be released, and it’s expected that prices have increased by .2 percent on a monthly basis.

The final full trading week in August was another eventful one, with several important news releases coming out. Most importantly, nothing has ruled out the possibility of an interest rate cut next month. In fact, some Fed members were openly admitting that the time had come to ease fiscal policy.

On Tuesday, the CB Consumer Confidence index was released and came in at 103.3, which was higher than the expected 100.9. It also came in higher than last month’s figure of 101.9. Ultimately, this means that respondents were bullish about what was to come for the economy despite the negative news released the previous week. Last Wednesday, it was revealed that there were 818,000 fewer jobs added to the economy from April 2023 to May 2024.

On Thursday, the preliminary gross domestic product (GDP) for the previous quarter was made public. During the previous three months, the economy grew by an estimated 3 percent compared to an expected increase of 2.8 percent. Also on Thursday, unemployment claim data was released and showed that there were 231,000 requests for benefits compared to an expected 232,000 requests.

On Friday, a slew of data was released including the Core PCE Price Index, which was up .2 percent on a monthly basis. This matched expectations as well as the result from last month’s report. In addition, the University of Michigan released its revised consumer sentiment and inflation expectation reports. Consumer sentiment was 67.9 percent compared to an expected 68 percent while inflation was expected to be at 2.8 percent roughly 12 months from now.

The S&P 500 finished the week down 6.74 points to close at 5,648, which was a decrease of .12 percent for the week. This was despite a strong close on Friday that saw the market gain 56 points or 1 percent. On Wednesday, the market made its low of the week at 5,566 and would make its high of the week on Monday morning at 5,649.

The Dow closed the week up 199.64 points to finish at 41,563, which was an increase of .48 percent. On Friday, the Dow 222 points to push the index into the black for the previous five trading days. On Wednesday afternoon, the market hit its low of the week at 40,861 while it closed at its weekly high.

The Nasdaq finished the week at 17,713, which was a decrease of 264 points or 1.48 percent. As with the other two indexes, the Nasdaq did make up some ground on Friday as it finished the day up 1.13 percent or 197 points. On Monday, the market opened at its weekly high of 17,902 and it would make a weekly low of 17,473 on Wednesday afternoon.

In international news, Australia announced its most recent annual CPI figures. Inflation in the country was 3.5 percent on an annualized basis compared to an expectation of 3.4 percent. On Thursday, it was revealed that German CPI was down .1 percent on a monthly basis while Spanish inflation was 2.2 percent on an annualized basis.

On Thursday evening, Japan announced its CPI came in at 2.4 percent on an annualized basis compared to an expected 2.2 percent. On Friday morning, Canada announced that its GDP growth was flat over the past month compared to an expected increase of .1 percent.

The upcoming week starts slow because of the Labor Day holiday, but both the ADP and Bureau of Labor Statistics (BLS) nonfarm payroll (NFP) reports come out on Thursday and Friday respectively.

On Tuesday, the ISM Manufacturing PMI report is released while the JOLTS job opening report comes out on Wednesday. Finally, unemployment claims data and ISM Services PMI comes out on Friday along with unemployment and hourly wage data. Canada will also announce employment change and hourly wage data on Friday morning.

The third week in August revealed a significant amount of information that will likely shape monetary policy for months to come. Perhaps the most important bit of news was a severe downgrade in the number of jobs added to the economy during the months of April 2023 to March 2024. It was revealed that there were likely 818,000 fewer jobs added than were reported.

This caused most major indexes, currencies and other markets to move significantly on Wednesday morning before settling back to where they were before the news came out. It was explained that the discrepancy was found when reconciling jobless claim reports over that period. Assuming that the new data is correct, it means that the economy was not nearly as hot as some believed it to be during the first part of 2024.

A slowing labor market will likely help to provide relief against inflation, and it will also likely convince the Fed to start cutting interest rates quickly. In fact, on Friday, Jerome Powell said that the time for cutting interest rates had come. The only question remaining is how fast and how deep the cuts will be. It’s assumed that a 25-basis point cut is coming in September at a minimum.

Of course, some believe that there is a need for a cut of 50 points in September and another 50 points over the next several months. Regardless, it does mark a turning point from just a couple of weeks ago when some members weren’t convinced that a cut would come before the end of the year.

There were a few noteworthy scheduled news releases this week starting on Wednesday when the FOMC released the July meeting minutes. The overall tone was described as dovish with many members tuning into the idea of a rate cut in September. However, until Powell’s comments on Friday, there was no indication that a cut was to be expected at any point in time.

On Thursday, unemployment claims data was released, and over the past seven days, there were 232,000 claims for benefits, which was in line with analyst expectations. Also on Thursday, the Flash Services and Flash Manufacturing PMI were released. The manufacturing index came in at 48 percent compared to an expected 49.5 percent while the services index came in at 55.2 percent compared to an expected 54 percent.

The S&P 500 closed up 58.41 points this week to finish at 5,634. It made its high and low of the week on Thursday hitting a peak of 5,638 and a low of 5,565 before reversing course into Friday.

The Dow finished the week up 374 points to close at 41,175. It would make its low of the week on Thursday morning when it dipped to 40,602 and would hit its high on Friday morning at 41,188. Over the past 12 months, the Dow has gained over 19 percent.

Finally, the Nasdaq ended the week up 1.06 percent to finish at 17,877. The index hit a weekly high of 17,877 on Thursday before reversing and making a weekly low of 17,606 on Thursday afternoon. However, it would then reverse on Friday, gaining 256 points on the day.

In international news, Canada announced on Friday that retail sales were down .3 percent while core retail sales were up .3 percent over the past month. On Tuesday, Canada announced that its inflation rate was .4 percent for the past month and 2.4 percent on an annualized basis.

The upcoming week will be another busy one as the CB Consumer Confidence report is set to be issued on Tuesday. In addition, preliminary gross domestic product (GDP) and unemployment claims data will be released on Thursday. Finally, on Friday, the monthly PCE Price Index is set to be released, and it is expected to come in at .2 percent.