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A daily recap of the stock market news by the MarketBeat editorial staff. Each market day you'll get a one-minute market summary to help you invest wisely.
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Equity markets pulled back on Thursday despite better than expected economic data. Not only did the retail sales data for August come in well above consensus but the Philly Fed?s Manufacturing Business Outlook Survey echoed the Empire State manufacturing report from earlier this week by coming in nearly double the expectations. On the retail front, retail sales rose 0.7% for the month versus an expected decline and are up 15% from last year. On the manufacturing front, an increase in orders, deliveries, and a decline in customer inventories all point to solid activity in the second half of the year. Next week, investors will turn their focus to the FOMC. There are a few economic reports on tap but the FOMC meeting will be the most important event of the week. The committee is not expected to alter its policy but it could shock the market with a more hawkish than expected stance.
Equity markets rebounded on Wednesday gaining roughly 0.75% at the highs of the session. The move puts an end to a 7-session streak of losses that have shaved nearly 2.5% from the S&P 500. If the market can maintain its footing at this level the uptrend will remain intact. If not the market could be in for another 1% to 9% correction before the end of the month. Wednesday trading was supported by better than expected data from the manufacturing sector. The New York Empire State manufacturing index rose unexpectedly and doubled the expectation on an increase in new orders, backlogs, and deliveries. The news bodes well for economic activity in the 3rd quarter but is only one of the dozens of reports for the market to digest such as the August read on retail sales. Retail sales are expected to decline from the previous year, the question is by how much?
Equity markets pulled back a bit on Tuesday despite a cooler than expected read on consumer inflation. The CPI index gained only 0.3% in August versus an expected gain of 0.4% dropping 0.2% from the previous month. The data brings the YOY gain down to 5.3% and the lowest level in two months. Investors remained cautious because, despite the cooldown in inflation, the pace of inflation remains high and posed a threat to the economy.Later in the week, traders will be eyeing the Empire State manufacturing survey, as well as the Philly Fed?s Manufacturing Business Outlook Survey, and the August read on Retail Sales. All three indices are expected to show a contraction of activity over the past month that could weigh on S&P 500 prices. The index remains near its all-time but is in danger of correction. A move lower would break support at the short-term moving average and may lead to a much deeper correction.
Equity markets were mixed on Monday as traders brace for what is largely expected to be a very hot read on Consumer Prices. The Dow Jones Industrial Average posted a small gain while the S&P 500 closed near break-even and the NASDAQ Composite moved lower. The data in question is the August read on consumer prices in the form of the Consumer Price Index. Consumer prices are expected to moderate from July?s 0.5% monthly gain to a still-warm 0.4% but there is upside risk in the consensus estimates. More importantly, the YOY gains are expected to remain hot and could accelerate sharply from the previous month. Later in the week, the market will be focused on the retail sales figure and what it might mean for Q3 earnings. August retail sales are expected to fall -0.7% from last year but this is versus last year?s very robust figure.
Equity Traders shrugged off an unbelievable sixth month of hotter than expected inflation on Friday to confirm support at the short-term moving average and a key uptrend line. The Producer Price Index came in at up 0.7% for the month of August and 8.3% over last year marking the fastest pace of inflation gains in several decades. With the FOMC seemingly out of touch with reality, investors and consumers should brace for the prices of all goods to continue trending higher.This week, the focus will be on the economic data as there are half a dozen or more key reports on the calendar. Topping the list is the August read of the Consumer Price Index, a report expected to show another acceleration in consumer prices as well. The good news for investors, at least for now, is that consumer prices are outpacing producer prices and that is helping too wide margins for the S&P 500.
Equity markets tried to rebound on Thursday but failed to hold much of the gains. The move was driven by a better than expected weekly jobless claims figure that helped brighten the market?s outlook. The news, as good as it is, was soon discounted however in favor of caution. With inflation on the rise, Friday?s PPI data is the next major hurdle for the market to cross. Even if the PPI subsides on a month-to-month basis as it is expected to do produced level price increases are still advancing and putting upward pressure on consumer prices. Next week, the market will have to face the latest read on the CPI data and that is where the real risk lay. Consumer Level inflation is what the FOMC is most concerned with so a hot or cold number could really get the market moving.
Equities slipped again on Wednesday with the FOMC?s Beige Book in the market?s focus. The Beige Book revealed improving conditions but also a growing uncertainty spurred by the resurgence of COVID-19 as well as mounting inflation. The key takeaway from the report is that the FOMC is still on track to begin tapering sometime this year. The market may get another clue as to when that will happen on Friday with the release of the PPI data. The consensus is for producer price increases to moderate from a 1.0% monthly gain posted in August to a slower 0.6% gain in September. Even so, producer level inflation is rising quickly and will lead to higher consumer prices down the road. If the PPI comes in hotter than expected the FOMC could begin the taper as soon as the September meeting in two weeks? time.
Equity markets started the week on a sour note with most major indices posting losses for the day. The NASDAQ Composite is the most noteworthy standout posting a small gain for the day and a new all-time high for investors. The move is driven more by a lack of impetus than anything else, with the fall trading season only now getting started the market is in need of a catalyst to get it moving. That catalyst may come later in the week. The Fed?s Beige Book is due out on Wednesday and the PPI data on Friday, either of which could get the market moving. In both cases, investors will be looking for signs of worsening inflation and clues to what the FOMC will do next. Hotter than expected inflation will accelerate the Fed?s plans for tapering and it could begin this month.
Equity markets ended the last week on a high note despite weaker than expected jobs data. The non-farm payrolls report showed less than half the expected number of new jobs were created despite record-setting levels of job openings. With the number of job openings only expected to rise as we enter the holiday shopping season it looks like the major retailers are going to be scrambling for employees. This will be a light week for trading with the Labor Day holiday cutting the week short. Other than that, there is little for the market to get excited about except the Fed?s Beige Book and the PPI data on Friday. Both the PPI data and Beige Book are expected to show the continued impacts of inflation and help drive the Fed closer to tapering and the eventual onset of tightening.
Equity markets edged higher on Thursday to set new all-time highs for the S&P 500 index. The broad market index traded within a very tight range following a round of better than expected economic data. The Factory Orders data came in a tenth hotter than expected at 0.4% following last month?s 1.5% increase. The gains suggest slowing activity but continued economic expansion and at a rate greater than forecast. On the employment front, the weekly jobless claims data came in better than expected and set the lowest level since the pandemic began. The claims data suggests Friday?s non-farm payrolls figure will be good as well. The analysts are expecting more than 700,000 new jobs were created in August, nearly double the amount indicated by the ADP report earlier in the week.
Equity markets edged higher on Thursday to set new all-time highs for the S&P 500 index. The broad market index traded within a very tight range following a round of better than expected economic data. The Factory Orders data came in a tenth hotter than expected at 0.4% following last month?s 1.5% increase. The gains suggest slowing activity but continued economic expansion and at a rate greater than forecast. On the employment front, the weekly jobless claims data came in better than expected and set the lowest level since the pandemic began. The claims data suggests Friday?s non-farm payrolls figure will be good as well. The analysts are expecting more than 700,000 new jobs were created in August, nearly double the amount indicated by the ADP report earlier in the week.
Equity Traders shrugged off a weaker-than-expected employment report from ADP in favor of the earnings outlook. The ADP report shows less than half the expected jobs were created in August putting a damper on the outlook for economic activity. The upshot is that ADP figures rarely track in line with the NFP figures which leaves the door open for the NFP report to impress the market on Friday. If not, equities could reverse their upward trend and begin moving lower once again.In other news, the ISM Manufacturing Index and the construction spending data we're both better than expected. This data is contrary to the weaker-than-expected employment figures and point not only to continued economic activity but an acceleration of activity in the third quarter of the year. The key takeaway is that the earnings outlook continues to improve, so long as those conditions remain in place the S&P 500 should continue to move higher.
Investors remained cautious on Tuesday with the NFP report just around the corner. The monthly report on job creation is supposed to show a slowdown in job creation from the previous month but a strong report nonetheless. While job creation has been tepid compared to the market?s expectations the pace of job growth has still been record-setting in relation to pre-COVID conditions. Despite the tepid tone on Wall Street, the S&P 500 and other major indices closed out the month of August with strong gains. The S&P 500 finished the month with a gain of nearly 3.0% and trading in new all-time high territory. As tall as the Wall of Worry has grown, the S&P 500 will probably continue to move higher as long as the data and corporate earnings are strong.
Equity markets started the week off strong and look to finish out August on a high note. Fears of rising inflation were put aside in favor of a robust earnings outlook that keeps getting better. The analysts continue to up their targets for the 3rd and 4th quarter reporting cycles leaving the theS&P 500 on track to set new all-time high after a new all-time high in the 2nd half of the year. The risk for the market this week is the monthly NFP data. The Non-farm Payrolls report is expected to show 720,000 net new jobs added in August, down from the 1 million jobs reported in July. A weaker than expected number would put the FOMC in a corner in regards to policy direction while hot data will seal the deal in regards to tapering. As it stands now, the market is expecting tapering to begin by October if not in September.
The markets recovered from another swoon last week to bounce from the short-term moving average and set new all-time highs. The swoon was caused by fear of rising inflation, fears that were confirmed by the PCE price index, but the market didn't care. The outlook for earnings continues to be bright and that alone is enough to keep the market moving higher. This week the focus will be on the non-farm payrolls report slated to be released on Friday. Last month, the US economy added 1 million new jobs including revisions, and that pace is expected for August. The weekly claims data continue to trend lower suggesting lower rates of unemployment as well. Better-than-expected data, or even just data in line with the consensus, could be enough for the market to set another fresh all-time high.
Equities pulled back on Thursday on an abundance of caution ahead of two key economic events. Today?s news will bring the latest word on consumer-level inflation in the form of the PCE price index while later in the day remarks from Fed Chief Jerome Powell could influence market sentiment. Mr. Powell is set to deliver the keynote address at the annual Jackson Hole Economic Policy Symposium and could key the market into the Fed?s next move. Friday action will be influenced by next week?s round of economic data as well. The monthly round of employment data to include the NFP report is due out and could lead the market to further caution. If the market continues to fall it could fall below the key 30-day moving average before finding firm support. In that scenario, a much deeper pullback is all too possible.
The markets continue to drift higher in the face of rising risks. The S&P 500 advanced about 0.25% on Wednesday and set another new all-time high. The move was bolstered by a better than expected durable goods figure that points to continued economic expansion in the second half of the year. Among the day?s leaders are hospitality and leisure stocks which gained from 1% to 7% in the wake of Johnson&Johnson?s COVID vaccine approval. Chipmakers were also among the days leaders after a wave of good news from within the sector. Market action may begin to heat up on Thursday as traders get ready for Jerome Powell?s keynote speech on Friday. The speech, delivered to the Jackson Hole Conference, may shed light on the Fed?s next steps. If the Fed chief can reassure the market the FOMC has inflation under control it could be ?off to the races? for the stock market.
Equity markets extended their gains on Tuesday and set another new all-time high. The caveat is that market action was greatly subdued compared to the prior two sessions. The S&P 500 advanced about 0.25% at the high of the day as momentum wanes. If the market can't get its legs under it and extend the rally the stage is set for another correction and this time it could be a full-blown 20% correction. Market action will likely be muted until Friday when the Bureau of Economic Analysis releases monthly income and spending data including the PCE price index. Another focus for the market this week is the Fed's Jackson Hole conference. The Fed is not expected to alter its policy at the conference but commentary from the members could sway sentiment in the market. Regardless, the Fed has become more hawkish in recent weeks and appears set to begin tapering this fall.
The Bulls came raging out of the gate on Monday driving the S&P 500 up more than 1% to set a new all-time high. The move comes on the eve of the Fed's Jackson Hole, Wyoming conference, a conference that could change the tone of the market for the second half of the year. There's little expectation the Fed will signal a major policy change but commentary from Individual members could sway Market sentiment.Also on tap this week is the Fed's favored indicator of consumer-level inflation, the PCE price index. The consensus estimate is for Consumer-level inflation to rise 0.3% over the past month, a tenth of a percent lower than the previous month, and for year-over-year gains to tame as well. With the Fed leaning more and more towards tapering, a hotter than expected number could easily lead the market to believe Fed tapering actions will occur quicker than currently forecast.
Equity markets bounced back strongly on Friday after a turbulent week. The rising threat of inflation was offset, however, by the rising promise of earnings in the 3rd and 4th quarters of the year. Not only did the second-quarter earnings cycle produce much stronger than expected growth but the consensus figures for the back half of the year continue to rise on strength in the retail sector. If this trend continues the S&P 500 should continue to set new all-time highs.The hurdle for the market this week is the PCE Price Index on Friday. The index is expected to show a rise in consumer-level inflation but at a slower pace than the previous month. If the data exceeds expectations like the recently released Producer Price Index the market could be in for a little more turbulence before the next new highs are set.
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