Stocks rose for a third consecutive week, extending their recovery from a sharp drop at the beginning of the month. The S&P 500 (SPX) gained 0.62% for the week, and the Dow Jones Industrial Average (DJIA) rose by 0.59%. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) were up by 0.95% and 1.10%, respectively. The DJIA has reached another record, while the NDAQ ended up less than 3% from its recent high.
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Markets rode the wave of continued optimism stemming from the Federal Reserve’s grand opening of the easing season. Investor optimism was considerably propped up by positive macro data, supporting the economic Goldilocks narrative.
The robust health of household consumption – a key driver of growth – received another badge of approval as the UoM Consumer Sentiment index jumped to a six-month high. Meanwhile, the Fed’s preferred inflation gauge, Core PCE, showed further steady easing of price pressures, printing a smaller-than-expected increase (the lowest since February 2021). In addition, the final estimate for Q2 GDP confirmed an annualized rate of growth at a healthy clip of 3%.
The data continues to confirm the central bank’s assessment of declining inflation amid gradually decelerating economic growth, while consumption is still strong and the job market remains resilient. That resilience is widely expected to be confirmed in the upcoming September labor-market reports scheduled for this Friday. Economists estimate that the unemployment rate remained unchanged from August’s 4.2%, while payrolls slightly rose from the previous month. The actual job market data will influence the scope of the next Fed rate cut at the policymakers’ next meeting in November. At the moment, traders see a split chance between a 0.25% and a 0.50% rate reduction.
Three Economic Events
Here are three economic events that could affect your portfolio this week. For a full listing of additional economic events, check out the TipRanks Economic Calendar.
» September’s ISM Manufacturing PMI – Tuesday, 10/01 – This report shows business conditions in the U.S. manufacturing sector and serves as a significant indicator of the overall economic conditions. PMIs are considered one of the most reliable leading indicators for assessing the state of the U.S. economy, helping analysts and economists anticipate changing economic trends.
» September’s ISM Services PMI – Thursday, 10/03 – This report shows business conditions in the U.S. services sector, which contributes over 70% of the U.S. GDP. PMI indices are leading economic indicators used by economists and analysts to gain timely insights into changing economic conditions, as the direction and rate of change in the PMIs usually precede changes in the overall economy.
» September’s Nonfarm Payrolls and Unemployment Rate – Friday, 10/04 – The Nonfarm Payrolls and Unemployment reports present the number of new jobs created during the previous month, along with the percentage of people actively seeking employment in the previous month. These reports are two of the most important economic indicators, as policymakers follow the shift in the number of positions as it is strongly associated with the overall health of the economy. One of the Federal Reserve mandates is full employment, and it considers labor market changes when determining its policy decisions.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
