Author: admin

The second full week of September featured several news releases that will help shape the narrative around what the Fed might do during its meeting on Sept. 22. On Wednesday, it was revealed that the Core Consumer Price Index (CPI) rose by .3 percent on a monthly basis while inflation including food and energy prices rose by .6 percent on a monthly basis in August. The inflation rate was 3.7 percent on a yearly basis, and all three inflation measures came in higher than analysts expected prior to their release.

On Thursday, it was revealed that both core and traditional retail sales were up .6 percent for the previous month. The Price Producer Index (PPI) for the month of August also went up by .7 percent, which was higher than the .4 percent predicted in the days prior to the report’s release.

In addition, unemployment claims data was released, and it was revealed that 220,000 claims were filed. This was higher than the number of claims filed last week but still lower than the 226,000 expected by analysts. Higher energy prices were cited as the reason for the increase in inflation while the rising costs of goods and services were cited as the reason for the increase in overall prices and retail sales.

On Friday, the Empire State Manufacturing Index was released and came in at 1.9, which was much higher than the -9.9 that was expected. It was also significantly higher than the -19 reported last month. What this means is that there was an expansion in the manufacturing sector relative to the previous month as opposed to a continued contraction.

Finally, Friday saw the release of the University of Michigan Consumer Sentiment and Inflation Expectations reports. Consumer sentiment came in at 67.7, with inflation was expected to be at 3.1 percent at this time next year. However, as this was merely preliminary data, there is a good chance that the actual figures will vary when released later in the month.

Taken as a whole, the news suggests that the economy is still growing and that it may be too early to consider an end to rate hikes. While it’s still likely that the Fed decides not to hike rates when it meets next week, Fed Chair Jerome Powell has said that future decisions will depend on the data. There is a belief that the Fed will telegraph the possibility that the next hike will be the last one in the current cycle during the press conference also scheduled for Wednesday afternoon.

The S&P 500 was contained within a tight range on Monday, Tuesday and Wednesday before breaking out on Thursday. On Thursday afternoon, the market made a high of 4,509 before reversing to finish at 4,450 at the end of trading Friday. That represented the low of a week in which the market finished down .84 percent.

The Dow 30 was down .34 percent this week finishing at 34,618. Like the S&P, it spent most of the week in a consolidated range making a low of 34,540 on Wednesday and a high of 34,941 on Thursday. For the year, the Dow is up 11.48 percent and is within 1,000 points of its 52-week high.

Finally, the Nasdaq was down 178 points this week, which was a loss of 1.28 percent over the last five trading days. The market finished the week at 13,708, which was slightly higher than the low of 13,704 that was made on Friday morning. As with the other two major indices, the Nasdaq would make its weekly high on Thursday at 13,951.

Treasury bond yields were up across the board this week as markets digested the myriad of news releases. The rate for the two-year Treasury bond is currently 5.03 percent while the 10-year bond is sitting at 4.29 percent. Tracking bond yields can be an effective barometer of where the Fed may be going as they often serve as an indication of where rates are heading during a given time period.

The upcoming week is going to be a significant one for traders and investors alike. Of course, the main event is that Fed’s rate decision that will be released at approximately 2 p.m. on Wednesday. Thursday will see the release of unemployment claims while Friday sees the release of Manufacturing PMI and Services PMI figures.

The first full week of September was a sluggish one in terms of news releases. This was partially because of the Labor Day holiday as well as the fact that there will be several important releases coming up. For instance, CPI numbers will be released this Wednesday while the Federal Reserve is holding its next interest rate meeting on the 20th.

Of course, this doesn’t mean that there weren’t any key developments this week. On Wednesday, the ISM Services PMI data was released, and the index came in at 54.5 percent, which was higher than the 52.5 percent that was expected. Furthermore, it was higher than the 52.7 percent from last month’s report. Any number over 50 indicates that a sector is experiencing a period of expansion, and the increase from last month shows that the service sector is expanding at an exponential rate.

Increased demand for services has been cited as a reason why core inflation numbers have yet to fall below 3 percent on an annual basis. It has also been cited as a reason why the Federal Reserve has not ruled out further interest rate hikes this year. Currently, the Fed Funds rate is in a range between 5.25 percent and 5.5 percent. It is worth noting that the Fed is not expected to increase rates at the September meeting.

This would be in line with decisions by the central banks of Australia and Canada last week to hold their rates steady for the time being. Several Fed members have said that it would be appropriate to pause in September and let the data decide whether another rate hike should be executed.

Thursday saw the release of unemployment claims data for the previous week. During that period, there were 216,000 claims made for assistance compared to 229,000 the previous week. This figure was less than the 232,000 claims that analysts believed had been made during the seven days prior to the report coming out.

The S&P 500 was down 1.76 percent this week to finish at 4,457. On Tuesday, the market made a high of 4,507 before trending down to 4,435 on Thursday morning. Although the week was a net loser for those with exposure to this index, the week did finish on a positive note as it gained a little more than six points on Friday.

Like the S&P, the Nasdaq had a rough week as it declined by 2.61 percent to finish at 13,761. It would make a high of 14,053 on Tuesday before spending the next three days in a freefall. On Thursday morning, the market fell to 13,679, which was the low for the week. Despite the poor performance last week, the Nasdaq is up over 16 percent for the year.

Compared to the other two major indices, the Dow had a relatively good week falling only 1 percent to close the week at 34,576. It would reach its high of the week Tuesday morning at 34,791 and would reach a low of 34,318 on Wednesday morning. From there, the market stayed in a relatively tight trading range on Thursday and Friday.

Although CPI data will be the highlight of the upcoming week, there will be a number of other important releases over the next several days. Thursday morning sees the release of PPI and retail sales figures, which will provide more insight into how consumers are reacting to higher prices.

The Empire State Manufacturing Index will be released on Friday as well as the University of Michigan Consumer Sentiment Index and inflation expectations data. Consumer sentiment is expected to have decreased to 69.2 compared to 69.5 in August.

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).