The final trading week saw a number of important data points were released. On Thursday, it was revealed that the economy grew by 3.3 percent over the past three months, which was higher than the projected 3 percent rate.
This is seen by many as vindication of President Trump’s ability to keep the economy growing despite the risk of inflation from implementing a tariff strategy. However, the PCE Price Index found inflation was up to 2.9 percent, which is the highest since February.
The Fed typically relies more on this report when determining how close or far away it is to its target of 2 percent inflation. It’s unclear whether the Fed is still on track to cut interest rates in September given the relative strength of the economy and the possibility of further price increases.
Still, the .3 percent monthly increase in the PCE Price Index was in line with expectations. It’s safe to assume that Jerome Powell’s comments about potential cuts at Jackson Hole last week were made with the assumption that inflation would be at roughly the levels revealed on Friday.
Consumer spending was up by .5 percent and personal income was up .4 percent on a monthly basis. This gives more evidence to show that consumers are resilient and the economy remains strong even in the face of potential inflationary pressures.
The final important piece of news this week came out on Thursday in the form of the unemployment claims figures for the past seven days. Over the past week, there were 229,000 claims compared to an expected 231,000. Last week, there were 234,000 requests for benefits.
The S&P 500 was stuck in a tight trading range this week, finishing up a little more than four points to close at 6,460. This was an increase of .07 percent for an index that was up about 1 percent in August. Still, the index is about 40 points from all-time highs and is expected to continue making gains throughout the rest of the year. For the week, the market made a low of 6,433 on Tuesday morning and made its high of 6,505 on Thursday.
The Dow was also stuck in a tight range this week finishing up 13 points to close at 45,544, an increase of .03 percent. Over the past month, the Dow has gained 1.34 percent. For the week, the market made its low on Tuesday when it dipped to 45,226 and made its high of 45,648 on Thursday.
The Nasdaq gained.01 percent to close on Friday at 21,455. For the month, the index gained just over 1 percent. For the week, the index made its weekly low of 21,398 on Tuesday and a high of 21,724 on Thursday.
In international news, Australia announced on Tuesday night that inflation had accelerated to 2.8 percent on an annualized basis. This was much higher than the projected 2.3 percent and the 1.9 percent announced in July. On Thursday, Switzerland announced that its GDP for the last quarter grew by .1 percent. On Friday morning, Canada announced that its GDP dropped by .1 percent over the past month.
The upcoming week will have the ADP nonfarm payroll report released on Thursday while the BLS version comes out on Friday. The JOLTS report as well as the ISM Services PMI are also scheduled for release next week.