The Week That Was, The Week Ahead: Macro & Markets, September 29, 2024

Everything to Know about Macro and Markets

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.

The weekly increases have placed the major indexes well on track for monthly gains, bucking historical trends of weak returns in September. The S&P 500 index has increased by over 20% year-to-date. If the most important global index succeeds in holding on to these gains until the end of 2024, it will be up by more than 20% for two years in a row for the first time since 1998.

Goldilocks Defeats the Bears

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 (which was 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%.

China and AI Lift U.S. Stocks

Dow Jones stocks, along with some S&P 500 sectors such as raw materials producers, were also boosted by new aggressive stimulus measures in China, which are expected to aid in the recovery of global demand for chemicals and other industrial inputs.    

Tech stocks also outperformed during the week, despite Friday’s declines. Investors cheered the robust outlook produced by Micron (MU), which added to AI optimism, as well as other positive tech sector news.     

Jobs are Key to Cut Size

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 has remained unchanged from August’s 4.2%, while payrolls are expected to have risen slightly 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.

Stocks That Made the News

¤ Nvidia (NVDA) finished the week with gains of over 4% despite a notable decline on Friday. Over the week, shares of the AI chip leader rallied on reports that CEO Jensen Huang’s stock trading plan was complete after offloading more than $700 million worth of shares, meaning he is not expected to sell any more NVDA shares any time soon. On Friday, Nvidia’s stock fell following the news that Chinese authorities have urged local firms to buy Chinese-made AI chips instead of the ones sold by NVDA.

¤ Micron Technology (MU) surged by almost 15% on the week after the largest U.S. producer of computer memory chips reported better-than-expected quarterly earnings and revenue and provided strong guidance for the ongoing quarter, helped by AI demand.

¤ Super Micro Computer (SMCI) saw its shares plunge on Thursday on news that the U.S. Department of Justice is reportedly investigating the company’s accounting practices. While the stock strongly rebounded on Friday ahead of this week’s 10-for-1 split, it still clocked in a weekly loss of almost 7%.

¤ Dell Technologies (DELL) also had a volatile week, surging by 8% through Thursday when it was added to the S&P 500 index, and then giving up most of the gains on Friday as investors took profits.  

¤ ServiceNow (NOW) stock fell by almost 6% in the past week as investors worried that its income from federal contracts would be impacted by the FBI’s raid on IT distributor Carahsoft Technology, which partners with NOW and other software firms to resell their offerings. According to analysts, NOW is the software company with the greatest exposure to Carahsoft.  

¤ Conventional energy industry stocks weakened over the week, with Diamondback (FANG) leading the losses. Crude oil prices fell on news that Saudi Arabia and other major producers have decided to raise their oil output. Meanwhile, weakness in gas prices also weighed on energy sector shares. ¤ Regeneron Pharmaceuticals (REGN) was the biggest loser in the S&P 500 last week, falling by over 9%, after suffering a legal setback. The company’s claim for a preliminary injunction against Amgen (AMGN) was dismissed by a federal judge, opening the door for Amgen to release its generic eyecare solution.

Upcoming Earnings and Dividend Announcements

The Q2 earnings season has ended while the Q3 season has yet to begin. However, several newsworthy earnings releases are still scheduled for this week, mostly from companies whose fiscal years differ from the calendar one.

The reporting companies this week are Carnival (CCL), Nike (NKE), McCormick & Company (MKC), Paychex (PAYX), Conagra Brands (CAG), RPM International (RPM), and Constellation Brands (STZ).Ex-dividend dates are coming this week for Deere (DE), Stryker (SYK), Mondelez International (MDLZ), Illinois Tool Works (ITW), Air Products and Chemicals (APD), Realty Income (O), Cisco Systems (CSCO), Comcast (CMCSA), JPMorgan Chase & Co. (JPM), and other dividend-paying firms.

For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.