The S & P 500 index dipped on Friday, but it logged its third straight weekly gain after three record closes the previous week. The Dow Jones Industrial Average also closed at a record high on Friday, gaining almost 0.6%, while the Nasdaq advanced nearly 1% but remained below its all-time high on July 10. Despite little reaction from stocks, there was confirmation that inflation was under control, with the 10-year Treasury yield moving lower. The August inflation numbers from the Fed’s favorite gauge, the PCE price index, showed tame increases, with the headline index rising 2.2% year over year and the core index rising 2.7%, right in line with expectations. This moderate inflation, combined with fewer than expected jobless claims and solid economic growth, provided a positive backdrop for investors to hold onto stocks.
With the market anticipating further rate cuts from the Federal Reserve, investors found comfort in moderating inflation and a stable economy. However, the market was considered to be overbought following the rally in stocks the previous week. The S & P Short Range Oscillator remained overbought for the ninth consecutive session on Friday, prompting some trimming of stock positions. Sales were made in GE Healthcare, Meta Platforms, Alphabet, and Danaher throughout the week, with Costco being the only company to report earnings. Despite delivering just okay numbers, Costco’s earnings beat and small revenue miss were still seen as reasons for investors to remain optimistic. The company’s stock price target was raised to $950, and a wait-for-a-pullback rating was maintained.
The upcoming week is expected to bring important events for the market, including quarterly results from Club name Constellation Brands and the government’s September employment report. The employment report, in particular, is highly anticipated as it will provide insight into the state of the labor market following the Fed’s recent interest rate cuts. Stable employment and wages are crucial for consumer spending, which drives a significant portion of the U.S. economy. Economists are expecting 150,000 nonfarm payroll additions, a 4.2% unemployment rate, and a 3.8% increase in hourly wages, in line with August figures. ADP will also release its September hiring trends report, which is used to predict the government’s nonfarm payroll numbers. Additionally, Constellation Brands is set to report its earnings, with a focus on beer volumes and margins as well as plans for its wine and spirits business.
The week ahead will also see other notable events such as ISM Manufacturing PMI, JOLTS Job Openings, and earnings reports from companies like Paychex, McCormick & Co, Nike, Conagra, and Levi Strauss. With trade alerts from Jim Cramer included in the CNBC Investing Club subscription, investors will have access to timely information before any trades are made in the charitable trust portfolio. Jim Cramer follows a strict waiting period before executing trades based on trade alerts, ensuring transparency and adherence to his trading strategies. The CNBC Investing Club provides valuable insights and opportunities for subscribers to stay informed and make informed investment decisions.
In summary, the recent market activity has been influenced by positive economic indicators like moderate inflation and solid economic growth, providing a supportive environment for investors to hold onto stocks. Trimming of overbought positions and cautious optimism regarding upcoming events like the employment report and earnings releases characterize the current market sentiment. With a focus on stable employment, consumer spending, and earnings performance, investors are navigating the market with a watchful eye on key indicators and trade opportunities.
