House Averts Government Shutdown – Sep 29 Market Recap
Indices
- Dow 33,507, -456 or -1.34%.
- Nasdaq 13,219, +8 or +0.06%.
- MSCI EAFE 2031.26, -33.44 or -1.62%.
- S&P 4,288, -32 or -0.74%.
- USD10Y 4.573%, +13.5bp or +3.04%.
- WTI Crude $90.79/bbl, +$0.44 or +0.49%.
House Averts Government Shutdown
With just a few hours to spare prior to the deadline Saturday night, the House passed a continuing resolution to keep the government open for another forty-five days. The Senate quickly passed the legislation, and the President signed it into law. At the time of this writing the Dow futures are up +107 points or roughly a third of a percent.
Undoubtedly, the focus will return to another potential governement shutdown in mid-November but in the meantime, there is plenty of data to parse through from last week. The most important of all the data last week was the August Personal Consumption Expenditure, which as we have noted in the space several times, is the Fed’s preferred measure of inflation. Encouragingly, Core PCE (which excludes the more volatile food and energy sectors), fell below 4% for the first time in nearly two years and settled at +3.9%. Other dovish inflation data this week included a flat month over month Personal Income print and Personal Spending which fell by more than half in August to +0.4% vs +0.9% last month. The probability of another pause at the November Fed rate meeting rose by 10% to 81.7% on Friday but then fell to 69.2% with the news of the Congressional action to keep the government operating.
Next Week
Q2 earnings have finally finished and Q3 earnings will begin in two weeks. However, there is still a full slate of economic data this week. The highlights include final August manufacturing and services data, August Job Openings and Labor Turnover Survey (JOLTS), and Friday’s much anticipated August Non-Farm payrolls report.
Economic Calendar
- Monday – September final U.S. S&P Manufacturing PMI and ISM Manufacturing Index.
- Tuesday – August JOLTS.
- Wednesday – September ADP Employment Report. Final U.S. S&P Services PMI and ISM Services Index.
- Thursday – Initial Jobless Claims.
- Friday – September Non-Farm Payrolls. September Hourly Earnings.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Sep 29 Daily Trading Recap…
Monday – Dow +43 to 34,006, Nasdaq +59 to 13,271, S&P +17 to 4,337, USD10Y +10.4bp to 4.542%.
- Eight of eleven S&P sectors traded higher, led by Energy, Materials, and Consumer Discretionary.
- The yield on the 10-year U.S. Treasury spiked to levels not seen since 2007 on ongoing government shutdown fears. Moody’s credit rating service published a note observing that a shutdown would be a negative credit event.
Tuesday – Dow -388 to 33,618, Nasdaq -207 to 13,063, S&P -63 to 4,273, USD10Y +1.6bp to 4.558%.
- All eleven S&P sectors traded down, led lower by Utilities, Consumer Discretionary, and Real Estate.
- September Consumer Confidence fell to 103 vs 105.5 expected and last month’s 108.7 print.
- Costco beat earnings and revenues, noting strong grocery sales but weaker trends with big ticket purchases.
Wednesday – Dow -68 to 33,550, Nasdaq +29 to 13,092, S&P +1 to 4,274, USD10Y +6.8bp to 4.626%
- Six of eleven S&P sectors traded down today, led lower by Utilities, Real Estate, and Consumer Staples.
- August Durable Goods Orders were up +0.2% vs –0.5% expected and vs –5.2% last month.
Thursday – Dow +116 to 33,666, Nasdaq +108 to 13,201, S&P +25 to 4,299, USD10Y –2.9bp to 4.597%.
- Ten of eleven S&P sectors traded higher today, led by Communication Services, Materials, and Consumer Discretionary.
- Jobless claims rose slightly to 204,000 vs 215,000 forecast and last week’s slightly revised higher print of 202,000 (originally 201,000).
- Q2 GDP Revision (third) was +2.1% vs 2.2% expected and vs the +2.1% 2nd revision.
- Nike (NKE) crushed their earnings estimates but missed on revenues due to weak sales in North America; NKE traded up +8% post close.
Friday – Dow -158 to 33,507, Nasdaq +18 to 13,219, S&P -11 to 4,288, USD10Y –2.4bp to 4.573%.
- Seven of eleven S&P sectors traded down, led lower by Energy, Financials and Health Care.
- August Core PCE rose only +0.1%, the lowest print since November 2020. As a result, year-over-year fell below 4.0% for the first time in almost two years, settling at +3.9%.
- August Headline PCE rose +0.4% vs +0.2% last month and the year-over-year number also rose to +3.5% vs +3.2% last month.
- August Personal Spending fell to +0.4% in line with expectations but down from +0.9% last month.
- August Personal Income was flat month-over-month and in line with expectations at +0.4%.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.