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).