Monday saw the release of the ISM Services PMI. It came in at 54.9, which suggests that the service sector is doing quite well. Services spending has been among the pillars of the economy since 2020 and has long been considered one of the key drivers of inflation. However, such spending has also minimized the risk of a recession during periods of relatively higher interest rates.
On Wednesday afternoon, the FOMC released the minutes from the September meeting. As expected, there was little drama or controversy surrounding the rate hike that occurred at that meeting. Furthermore, the minutes revealed that there is little disagreement over the need for another hike. However, there is some discussion as to when that hike should take place and what the criteria would be to follow through on it.
Thursday morning, unemployment claims data for the previous seven days was released. During that period, there were 197,000 claims, which matched the total from last week. On Friday, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment came in at 46.3 compared to an expected 47.5.
Inflation is expected to be at 4.7 percent 12 months from now. If true, that would represent a significant increase from today’s level of about 3.4 percent on an annualized basis. Next week, the CPI report for September is due out, and analysts believe that inflation has risen to 3.6 percent on an annualized basis.
The S&P 500 was up 1 percent this week to close Friday’s trading at 7,811. This was a gain of 77 points over the last five trading days. Over the past month, the index is up 1.75 percent. This week, the index made a low of 7.735 early Monday morning and made a high of 7,842 on Tuesday afternoon.
The Dow was up 1.58 percent to finish the week at 51,654. This was a gain of just over 800 points for the index. Despite the strong performance over the last five days, it is still down 1.89 percent over the past month. For the week, the index made a low of 50,916 on the open of Monday’s session and a high of 51,753 just prior to the close on Friday.
Finally, the Nasdaq was flat this week, losing four points to close at 27,366. This was a loss of .01 percent over the last five trading days. The index is up 3.72 percent over the last month. This week, the Nasdaq made a high of 27,716 on Tuesday and a low of 27,094 on Thursday afternoon.
In international news, Canada announced Friday that its economy lost 68,000 jobs in September. This was compared to a projected gain of about 4,000 prior to the release. It was also announced that Canada’s unemployment rate increased to 6.5 percent from 6.4 percent in August. On Tuesday, the head of the Bank of Japan (BOJ) said that the nation may raise its key interest rate later in October. Despite this, he claims that monetary policy in the country remains conducive to economic growth.
This week should be another interesting one for market participants. In addition to CPI data, retail sales and PPI for September as scheduled to be released on Thursday. Unemployment claims will also be released on Thursday, as well as the Philly Fed Manufacturing Index. Fed Chair Warsh is scheduled to speak late Thursday night at a meeting of the World Bank and International Monetary Fund in Bangkok.