Last Week
The stock market suffered three days of losses sandwiched between gains on Monday and Friday, as Wall Street snapped a three-week winning streak to finish modestly lower. The Fed remained in the spotlight, cutting rates as expected on Wednesday, but conflicting remarks from Federal Reserve speakers created uncertainty over the size and pace of future rate cuts. On one end of the spectrum were newly appointed Governor Stephen Miran and Vice Chair for Supervision Michelle Bowman, suggesting that 6 or more additional rate cuts were to address the deteriorating labor market conditions. On the other hand, Chicago Fed President Austan Goolsbee and others cautioned about moving too quickly on rate cuts. Meanwhile, during his press conference, Chairman Powell stayed on his message that the risk of tariff-related inflation was still a key determinant in his policy decisions. In other words, do not count your cuts before they are hatched.
The economic news was quite good, as increased consumer spending resulted in an upward revision in the final estimate of U.S. Q2 GDP growth to 3.8% from 3.3%. Additionally, the increase in the PCE, the Fed’s preferred inflation gauge, matched expectations with a 2.9% year-over-year increase.
The S&P 500 index slipped 0.3% for the week, the Nasdaq Composite retreated 0.7%, and the Russell 2000 shed 0.6%. Declining issues outnumbered advancing issues by a factor of 1.7-1, and only the Oil&Gas and Utility sectors finished in the green. Gold reached yet another record high. The Dollar remained steady, and the yield on the 10-year Treasury inched up 5 basis points to 4.19%.
We have not mentioned the VIX, otherwise known as the “fear index,” in quite some time. The index’s current direction seems both noteworthy and curious. In other words, despite all the uncertainties and extended equity valuations, investors are showing no evidence of concern or demand for portfolio protection.
On the Chicago Sports Scene, the Cubs will host the Padres in the playoffs starting on Tuesday. The Bears took home an exciting 25-24 win versus the Las Vegas Raiders after a blocked field goal with time expiring, improving their record to 2-2.
This Week
Tariffs, shutdown, and jobs, oh my!
The tariff tweeting teeter-totter will be in action, with another round of trade taxes scheduled for the beginning of October.
A government shutdown looms at midnight on Tuesday, with no signs that a deal is likely.
August job openings data will arrive earlier on Tuesday, followed by private employment figures on Wednesday. The most significant economic data release will be the September nonfarm payrolls jobs report on Friday, assuming that the government is open for business and able to make the release.
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