Last Week
All was quiet on Wall Street, as traders digested solid economic data, Nvidia’s earnings, and the never-ending news flow in the nation’s capital.
Nvidia, the world’s largest chipmaker and most highly valued company, posted terrific earnings, but investors fretted over its conservative revenue guidance, leading to a modest share price decline. Stocks priced to perfection carry the risk of selling off on good news.
On the economic calendar, the second estimate of U.S. Q2 gross domestic product growth was revised upwards to an annual rate of +3.3% from +3.0%. Meanwhile, the core personal consumption expenditures price (PCE) was in line with estimates, albeit higher than the Fed’s aspirational target of 2%.
Speaking of the Fed, President Trump “fired” Fed Governor Lisa Cook from the board. Cook filed a lawsuit that challenged the move. A hearing to decide whether Cook could keep her job while her lawsuit progressed did not reach a decision by the end of the week. Trump also declared a 50% tariff on India, as his relationship with India’s Prime Minister Modi deteriorated. Meanwhile, an appellate court ruled that many of Donald Trump’s tariffs were unlawful, as he overstepped his authority by invoking the International Emergency Economic Powers Act (IEEPA) to impose them. The 7-4 decision upheld a lower court’s ruling that the IEEPA does not grant the President the power to impose such broad tariffs. However, the ruling’s effectiveness was delayed until October 14 to allow the Trump administration time to appeal to the Supreme Court. Although the economy and the markets have still been strong, the impact of the tariffs has yet to work its way through the system. If the international community loses faith in our monetary system, it could lead to capital outflows that would hurt the economy and markets.
For the week, the S&P 500 slipped 0.1%, the Nasdaq Composite lost 0.2%, while the Russell 2000 eked out a 0.2% gain. Small caps had a terrific month in August, gaining 7%, to move comfortably in the green for 2025. A strong economy, combined with easing monetary policy, has set the stage for continued improved performance from small caps. Please contact us at info@nsinvest.com or visit our website to learn more about our proprietary small-cap strategies.
The bond market also had a quiet week, with the yield on the 10-year Treasury inching 3 basis points lower to 4.23%. Gold was the big winner, gaining 3% to reach a new record high, and the Dollar remained steady at a multi-year low.
On the Chicago Sports Scene, while Cubs fans painfully remember last year’s September swoon, and of course the historic collapse in 1969, a wildcard spot is locked up with just over 20 games to go in the regular season. Sox and Sky fans eagerly look forward to the end of their teams’ miserable seasons, while hope springs eternal for our winter franchise. Bear Down!
This Week
The holiday-shortened trading week will focus squarely on the labor market. An Institute for Supply Management report due Tuesday is expected to show that U.S. manufacturing has been in retrenchment for six straight months. Updates on job openings and private sector employment are anticipated for Wednesday and Thursday. Friday’s release of August nonfarm payrolls will be the big event, following an extremely soft report in July, which saw one of the biggest two-month downward revisions to job growth in decades. The report will probably reflect employers’ reluctance to take on workers during August, and the unemployment rate could tick up to an almost four-year high.
There is no doubt that political turbulence will also dominate the headlines.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.