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The week leading up to the Labor Day holiday was an interesting one for traders. On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) found that there were 8.83 million open positions in the United States in August. This was down from 9.17 million in July and was well below expectations of 9.49 million openings.

In addition, Tuesday saw the release of the Consumer Board consumer confidence index, which came in at 106.1. This was down from 114 last month and was below the 116 figure that analysts had predicted before the report’s release. This was the first report during the week that showed a potential for softness in the economy, and information released on Wednesday would continue to show that a recession may still be in the cards.

On Wednesday, the ADP nonfarm employment change report found that there was an increase of 177,000 jobs during the previous month. However, that was much lower than the 371,000 jobs created in July, and it was also lower than the 194,000 jobs that analysts believed had been created during the period.

Preliminary gross domestic product (GDP) figures were also released on Wednesday, and growth had slowed to 2.1 percent compared to 2.4 percent during the first quarter of the year. It was believed that the economy had grown an additional 2.4 percent during the second quarter of the year.

Finally, home sales data was made available to the public on the third day of the trading week. During the previous month, pending home sales were up .9 percent compared to analyst expectations of a drop of .8 percent. Last month, pending home sales were up .4 percent.

Thursday saw the release of unemployment claims data for the previous week. Over the past seven days, there were 228,000 claims compared to expectations of 236,000 claims during that time period. This week’s figures were slightly lower than the 232,000 benefit applications filed two weeks ago.

In addition, the Core PCE Price Index for the previous month came out, and it showed that prices had increased by .2 percent, which was in line with expectations. Prices for core goods had also increased by .2 percent in July.

On Friday, the Bureau of Labor Statistics (BLS) released its nonfarm payroll report (NPR) for the month of August. The report showed that the economy added 187,000 jobs compared to 157,000 in July. Other data released on Friday showed that the unemployment rate had gone up to 3.8 percent from 3.5 percent a month prior. Average hourly earnings increased by .2 percent, which was lower than the .3 percent predicted prior to the release of this data.

The Dow finished the week at 34,837, which was a gain of 212 points or .61 percent during this period. On Monday, the Dow made its low of the week at 34,445 before climbing to a high of 35,008 on Wednesday.

Like the Dow, the Nasdaq finished the week higher. At the close of trading Friday, the market was at 14,031, which was an increase of 2.6 percent compared to its opening price on Monday. The Nasdaq would reach its low of the week of 13,642 on Monday afternoon before steadily climbing to a high of 14,131 on Friday.

Investors in the S&P 500 also saw a positive return on their investment this week as the market closed up 1.89 percent at 4,515. As with the other two major indexes, the S&P made its low on Monday and reached its high for the week on Friday.

This upcoming week is going to be relatively light on news in the United States with the ISM Services PMI on Wednesday perhaps the only noteworthy release on the schedule. However, rate decisions in Australia and Canada will likely provide some insight into what the Fed might do when it meets later in September.

The final full week of August saw several significant developments. On Wednesday, Flash Manufacturing and Flash Services PMI data was made available, and both surveys showed a decline in demand for both manufacturing and services in the United States. The manufacturing index came in at 47 percent, which was 2 percent lower than last month and below the 48.9 percent predicted by analysts prior to the news.

Meanwhile, the services index came in at 51 percent, which was lower than the 52.3 percent predicted by analysts prior to the news. These figures imply that there is a possible slowdown or recession in the future despite assurances from members of the Fed that the economy may be able to avoid one. Also on Wednesday, new home sales figures were released, and in the past month, there were 714,000 such sales, which is about 30,000 more than the previous month.

On Thursday, durable goods order data was released, revealing durable good sales dropped by 5.2 percent over the previous month. However, core durable sales were up .5 percent on a monthly basis, which was higher than .2 percent predicted by analysts. In addition, unemployment claim figures were made public. Over the past week, 230,000 people filed for benefits. This was a drop from 240,000 last week and below the 239,000 claims projected.

The University of Michigan consumer sentiment data was revised downward to 69.5 while inflation expectations were revised upward from 3.3 percent to 3.5 percent.

As consumer expectations can sometimes turn out to be a self-fulfilling prophecy, expectations for an uptick in inflation may cause one to occur. This is because consumers may be willing to spend more if they accept that higher prices are simply a fact of life. In addition, they may demand higher wages, which can also result in price hikes as companies look for ways to defray the costs that they have incurred.

The Jackson Hole Symposium, a gathering of influential financial leaders, started Thursday. The guest list for the event included Federal Reserve Chairman Jerome Powell who spoke on Friday.
During his speech, Powell acknowledged that core prices were still rising well above the 2 percent target inflation rate. He said that based on data revealed this week, core prices were projected to increase by 4.3 percent when the next report is issued. Although data released in the previous week suggested that the Fed was likely done with interest rate hikes, Powell alluded to the possibility of more hikes if needed.

However, there was no definitive statement that a hike was coming in September. At a minimum, rates are expected to remain where they are for the rest of 2023 before possibly coming down again at some point in 2024.

The S&P 500 finished up 24.58 points to close at 4,405 for the week. On Monday, the market opened at 4,380 and steadily climbed to its week high of 4,448 on Thursday morning. On Friday, the market hit its weekly low of 4,356 at around 11 a.m. before climbing.

The Dow 30 was down 197.38 points this week to close at 34,346. Throughout the week, stocks would remain stuck in a relatively narrow range that saw a high of 34,671 on Thursday and a low of 34,054 on Friday morning.

Finally, the Nasdaq was up 182.39 points this week to finish at 13,590. As with the other two major indices, it hit its high on Thursday at 13,804. However, unlike the other two markets, the Nasdaq made its low for the week of 13,343 on Monday morning.

Next week is set to be a big one for investors as nonfarm payroll reports are issued on Wednesday and Friday. Preliminary GDP figures are set to be released on Wednesday while the Core PCE Price Index will be made available on Thursday along with unemployment claims data. Consumer confidence data is also scheduled to be released on Tuesday as well as the Job Openings and Labor Turnover Survey (JOLTS).

This past week featured the release of several reports that provided important clues about where the economy may be headed. On Tuesday, monthly retail sales figures were released. On a monthly basis, retail sales increased by .7 percent, which was much higher than the .4 percent increase predicted by analysts. It was also more than double the .3 percent increase seen in July.

Core retail sales were up 1 percent on a monthly basis, which was higher than the predicted .4 percent increase and roughly 500 percent higher than the .2 percent increase seen in July. it is worth noting that retail sales figures for July were revised downward after their initial release. Therefore, it’s possible that the acceleration in consumer spending is nothing more than a problem with the data itself.

Also on Tuesday, the Empire State Manufacturing Index came in at -19 percent, which means that there was a significant slowdown in this sector over the previous month. This likely adds further proof to the narrative that inflation is largely being fueled by spending on services as opposed to durable goods. Analysts had expected the index to come in at -.9 percent for the month.

On Wednesday, building permit data for July was released, and it found that there were 1.44 million permits, which was the same as June. However, it was believed prior to Wednesday that there were 1.47 million permits issued. Housing starts increased from 1.40 million to 1.45 million, which may be good news for a market that has been haunted by a lack of inventory for several years now.

Of course, the main event on Wednesday was the release of the FOMC minutes from the July meeting. It was revealed that some members of the FOMC were against raising rates in July. It was also revealed that many in the group also feel as if inflationary pressures are still too great and that further rate hikes might be necessary.

It was assumed after the release of CPI and PPI data last week that the Fed was done with its hiking cycle. While this may still be true, it’s less likely that investors can count on a dovish Fed coming to their rescue anytime soon. The FOMC will meet again in September to determine whether to increase the Fed Funds Rate from its current level of 5.25 to 5.50 percent.

Thursday saw the release of unemployment claims data, and it was revealed that 239,000 people had filed for unemployment benefits over the past week. This was slightly below the 240,000 claims predicted by analysts and was also lower than the 250,000 claims filed a week ago.

In addition, the Philly Fed Manufacturing Index was released and came in at 12 percent. It was expected to come in at -9.8 percent and was at -13 percent last month. It’s not clear what led to the sudden rise and why it seems to be at odds with the data released from New York just two days prior.

For the week, the S&P 500 lost 91.34 points to finish at 4,369, which is 2 percent lower than its Monday open. The market hit a high of 4,489 on Monday afternoon before spending the rest of the week losing ground. It would hit a low of 4,350 on Friday morning before moving toward its closing price on Friday afternoon.

The Nasdaq also lost about 2 percent this week closing at 13,290. Like the S&P 500, the Nasdaq would also hit its high of 13,747 on Monday afternoon before spending most of the week in freefall. It would hit its low of the week of 13,176 on Friday morning.

Finally, the Dow would also lose about 2 percent this week closing at 34,500 on Friday afternoon. As with the other two major indices, the Dow hit its high of 35,267 on Monday and would fall throughout the rest of the week to its low of 34,392 on Friday morning.

Next week will likely see several developments as Federal Reserve Chair Jay Powell is expected to speak on Friday. Manufacturing and services PMI data will also be coming out this week along with unemployment claims and housing market data.