Market Perspective for September 10, 2023

The first full week of September was a sluggish one in terms of news releases. This was partially because of the Labor Day holiday as well as the fact that there will be several important releases coming up. For instance, CPI numbers will be released this Wednesday while the Federal Reserve is holding its next interest rate meeting on the 20th.

Of course, this doesn’t mean that there weren’t any key developments this week. On Wednesday, the ISM Services PMI data was released, and the index came in at 54.5 percent, which was higher than the 52.5 percent that was expected. Furthermore, it was higher than the 52.7 percent from last month’s report. Any number over 50 indicates that a sector is experiencing a period of expansion, and the increase from last month shows that the service sector is expanding at an exponential rate.

Increased demand for services has been cited as a reason why core inflation numbers have yet to fall below 3 percent on an annual basis. It has also been cited as a reason why the Federal Reserve has not ruled out further interest rate hikes this year. Currently, the Fed Funds rate is in a range between 5.25 percent and 5.5 percent. It is worth noting that the Fed is not expected to increase rates at the September meeting.

This would be in line with decisions by the central banks of Australia and Canada last week to hold their rates steady for the time being. Several Fed members have said that it would be appropriate to pause in September and let the data decide whether another rate hike should be executed.

Thursday saw the release of unemployment claims data for the previous week. During that period, there were 216,000 claims made for assistance compared to 229,000 the previous week. This figure was less than the 232,000 claims that analysts believed had been made during the seven days prior to the report coming out.

The S&P 500 was down 1.76 percent this week to finish at 4,457. On Tuesday, the market made a high of 4,507 before trending down to 4,435 on Thursday morning. Although the week was a net loser for those with exposure to this index, the week did finish on a positive note as it gained a little more than six points on Friday.

Like the S&P, the Nasdaq had a rough week as it declined by 2.61 percent to finish at 13,761. It would make a high of 14,053 on Tuesday before spending the next three days in a freefall. On Thursday morning, the market fell to 13,679, which was the low for the week. Despite the poor performance last week, the Nasdaq is up over 16 percent for the year.

Compared to the other two major indices, the Dow had a relatively good week falling only 1 percent to close the week at 34,576. It would reach its high of the week Tuesday morning at 34,791 and would reach a low of 34,318 on Wednesday morning. From there, the market stayed in a relatively tight trading range on Thursday and Friday.

Although CPI data will be the highlight of the upcoming week, there will be a number of other important releases over the next several days. Thursday morning sees the release of PPI and retail sales figures, which will provide more insight into how consumers are reacting to higher prices.

The Empire State Manufacturing Index will be released on Friday as well as the University of Michigan Consumer Sentiment Index and inflation expectations data. Consumer sentiment is expected to have decreased to 69.2 compared to 69.5 in August.

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