Weekly Market Update - S&P 500

Week Ending: September 1st, 2024

The S&P 500 experienced a rollercoaster ride last week. It was up, it was down, it was all around and by the end of the week it finished about where it started. The SPY opened on Monday at 563.18. Dipped down to 555.04 on Wednesday and closed on Friday at 563.68. Part of the reason for all the up and down is the fact that we were saddled with a mix of economic data painting a complex picture of the market. Let's break down the key events that swayed investor sentiment.

Economic Highlights:

• JOLTS Report: The Job Openings and Labor Turnover Survey (JOLTS) showed a decline in job openings, suggesting a cooling labor market. This sparked optimism as it is yet another reason for the FED to lower interest rates in September potentially benefiting stocks.

• Consumer Confidence Dip: The consumer confidence index declined more than expected, indicating growing concerns about the economic outlook. This dampened market sentiment and contributed to some volatility.

• Revised GDP: The second estimate of the second-quarter GDP was revised upward to 3 from 2.8%. This is a more accurate number because it includes more data than the advanced estimate that was released in July, according to the BEA – Bureau of Economic Analysis.

• PCE Price Index: The Personal Consumption Expenditures (PCE) price index, the Fed's preferred inflation gauge, ticked up, reinforcing concerns about persistent inflation. This added to market uncertainty and fueled the debate among economists about whether the Fed will go 25 bps or 50 bps.

Market Sentiment & Outlook:

Investor sentiment remained cautious amid mixed economic data. The tug-of-war between hopes for a less hawkish Fed and worries about inflation created a volatile environment.

Looking ahead, investors will closely monitor upcoming economic data and the Fed's actions in September for clues about the market's future direction. Key factors to watch include:

• Upcoming Inflation Data: Further insights into the inflation trend will be crucial in shaping the Fed's policy decisions.

• Employment Reports: The health of the labor market remains a key factor influencing the Fed's actions. The numbers coming out of DC are suspect, but they still have an impact on the stock market in the short term. The employment report due out on Friday this week will get a lot of attention.

• Corporate Earnings: As we are almost through earnings season most companies performed above expectations and grew earnings by around 10% on average. However, the guidance has been weak and, in some cases, has not been provided. It is the future guidance that can provide valuable insights into the overall health of the company and the economy.

Conclusion:

The S&P 500's performance last week reflected a market grappling with mixed signals. While a cooling labor market offered some hope, concerns about inflation and the economic outlook kept investors on edge. The path forward remains uncertain, and staying informed about economic developments and Fed policy will be crucial for navigating these volatile times.

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always consult with a qualified financial professional before making any investment decisions.  

Sources

1. fintechzoomcalc.com/fintechzoom-mortgage-calculator/

2. Investopedia.com

3. Bloomberg news