Economy to Fed… Soft Landing In Progress, Sep 1 Market Recap
Indices
- Dow 34,837, +491 or +1.43%.
- Nasdaq 13,591, +440 or +3.24%.
- MSCI EAFE 2104.02, +50.54 or +2.46%.
- S&P 4,515, +109 or +2.47%.
- USD10Y 4.173%, -6.6bp or -1.56%.
- WTI Crude $86.05/bbl, +$6.22 or +7.79%.
Economy to Fed… Soft Landing In Progress
There was nothing not to like from this week’s market action. The indices surged on “Goldilocks” economic data. To wit…
- The Job Openings and Labor Turnover Survey (JOLTS) posted the lowest number of job openings since March of 2021. The Fed has stated that they want to see some slack in the labor market. Check.
- August Consumer Confidence fell to 106.1 vs expectations of 116 and vs last month’s 114.8 print. People spend more money when they are confident. A falling confidence number, while still above 100, is in the sweet spot of being neither deflationary nor inflationary. Check.
- Q2 GDP was revised down from the initial estimate of +2.4% annualized growth to +2.1%. The new estimate is much more in the slow, steady growth category rather than the more aggressive (inflationary) growth trajectory that the first estimate of +2.4% suggested. Net net, this is a Fed friendly data point. Check.
- The July Personal Consumption Expenditure figures were largely in line with expectations. Both the Headline and Core numbers were up +0.2% month over month, unchanged from last month. While both numbers increased year over year, neither number was unexpected. Check.
- The U.S. August Unemployment rate jumped to 3.8% vs 3.5% expected and last month’s print of 3.5%. More evidence of increasing slack in the labor markets. Check.
- August hourly wages were less than expected at +0.2% vs +0.3% expected and last month’s +0.4% increase. This is a very important data point for the Fed, and this is a very Fed friendly number. Check.
- The August S&P and ISM Manufacturing Surveys demonstrated slight improvement, but both are still firmly in contraction. Disinflationary. Check.
There were some data points that will worry the Fed and the inflation hawks that sit on the committee. Weekly jobless claims dipped below expectations, have fallen three consecutive weeks and are now below their four-week moving average. August Non-Farm payrolls also added more jobs than had been expected and more than last month as well. However, these two data points were not enough to rattle the markets and in fact, the probabilities of a rate hike pause jumped from 84% to 94% at the September 20 Fed meeting and from 44.5% to 64.6% at the following meeting on November 1.
Next Week
It’s a light week both with economic data and earnings.
Economic Calendar
- Monday – Markets closed in observance of Labor Day.
- Tuesday – N/A.
- Wednesday – August Final S&P U.S. Services PMI, August Final U.S. ISM Manufacturing Index.
- Thursday – Initial Jobless Claims. Multiple Fed officials speak.
- Friday – N/A.
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 1 Daily Trading Recap…
Monday – Dow +213 to 34,559, Nasdaq +114 to 13,705, S&P +27 to 4,433, USD10Y -2.7bp to 4.212%.
- Nine of eleven S&P sectors traded higher, led by Communication Services, Technology and Industrials.
Tuesday – Dow +294 to 34,853, Nasdaq +239 to 13,944, S&P +64 to 4,497, USD10Y -9.0bp to 4.122%.
- July JOLTS (Job Openings and Labor Turnover Survey) fell to 8.55 million, the first time the figure has been below 9 million since March of 2021.
- August Consumer Confidence fell to 106.1 vs expectations of 116 and vs last month’s 114.8 print.
Wednesday – Dow +37 to 34,890, Nasdaq +75 to 14,019, S&P +17 to 4,514, USD10Y -0.4bp to 4.118%
- Nine of eleven S&P sectors traded higher, led by Technology, Energy, and Industrials.
- August ADP Private Payrolls added 177,000 jobs, below the 200,000 forecast and below last month’s 371,000 print.
- Q2 GDP was revised down to +2.1% from the initial reading of +2.4% annual growth.
- Salesforce (CRM) blew out earnings, beat revenue expectations, guided their third quarter higher, and traded up +5.6% after the close.
Thursday – Dow -168 to 34,721, Nasdaq +15 to 14,034, S&P -7 to 4,507, USD10Y –2.5bp to 4.093%.
- Seven of eleven S&P sectors traded down, led lower by Health, Utilities, and Real Estate.
- Jobless claims fell to 228,000 vs the 235,000 forecast and last week’s revised higher print of 232,000 (originally 230,000).
- July Personal Consumption Expenditure (PCE) was up +0.2%, unchanged from last month, and the Year over Year print rose to +3.3% vs last month’s +3.0% print.
- July Core PCE also rose +0.2%, also unchanged from last month. YoY Core PCE increased to +4.2% vs +4.1% last month.
Friday – Dow +115 to 34,837, Nasdaq –3 to 14,031, S&P +8 to 4,515, USD10Y +8.0bp to 4.173%.
- Six of the eleven S&P sectors traded higher, led by Energy, Materials, and Financials.
- August Non-Farm Payrolls were better than expected at 187,000 vs 170,000 expected an vs last month’s 157,000 print.
- The U.S. August Unemployment rate jumped to 3.8% vs 3.5% expected and last month’s print of 3.5%.
- August hourly wages were less than expected at +0.2% vs +0.3% expected and last month’s +0.4% increase.
- The August S&P U.S. Manufacturing PMI was still firmly in contraction territory at 47.9 vs 47 expected and vs last month’s 47 print.
- The August ISM Manufacturing Index also improved slightly while still demonstrating contraction at 47.6% vs 47.7% expected and vs last month’s 46.4% print.
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.
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