Weekly Market Summary: September 9, 2024
This week is shaping up to be crucial for markets as investors prepare for the release of key economic data and important earnings reports. Coming off a mixed performance last week, the stock market will look to make sense of the latest inflation data as we approach the Federal Reserve’s September meeting. Here’s what to watch this week.
Last Week’s Market Recap
The market experienced volatility last week with the S&P 500 down 1.6%, the Nasdaq Composite dropping by 2.3%, and the Dow Jones Industrial Average declining by 0.8%. The dip came as a result of renewed concerns over inflation and mixed earnings results from key players in the tech and retail sectors. The weaker-than-expected ISM Manufacturing PMI data only added to concerns that the economic recovery might be slowing down.
What to Expect This Week
Earnings Reports
Several key earnings reports are slated for this week, which will provide further insights into the health of various sectors:
- Oracle (ORCL): Reporting on Monday, September 9, Oracle’s results will be closely watched for insights into the tech sector, especially cloud computing and enterprise software.
- Adobe (ADBE): Reporting on Tuesday, September 12, Adobe’s earnings will be a bellwether for the creative and digital media industries.
- Kroger (KR) and Lennar (LEN): Both companies report on Thursday, September 12. Kroger’s earnings will offer insights into consumer spending in the face of inflation, while Lennar’s results will shed light on the housing market amid rising interest rates.
These reports will be pivotal in determining whether last week’s market dip was a temporary blip or a sign of more volatility to come.
Key Economic Data
The spotlight will also be on critical economic reports this week:
- Consumer Price Index (CPI) – Wednesday, September 11: This is the most anticipated data release of the week. Analysts expect CPI to rise modestly by 0.2% month-over-month. This report will offer the Federal Reserve more clarity on whether inflation is easing and will heavily influence their rate decision next week.
- Producer Price Index (PPI) – Thursday, September 12: PPI will provide insights into wholesale inflation, which can often lead to price increases for consumers. A higher-than-expected number here could further pressure the Fed to keep rates elevated.
These inflation data points are crucial because they will be the last major reports before the Federal Open Market Committee (FOMC) meeting on September 17-18.
FOMC Meeting: What to Expect
Next week’s FOMC meeting will likely be one of the most closely watched in recent memory. After a year of aggressive rate hikes, the market is anticipating the possibility of the Fed cutting rates, although this is far from certain. The Fed has indicated it needs to see consistent declines in inflation before making any cuts, but if CPI and PPI data show moderation, a 25-basis-point cut could be on the table.
Market Reactions
Should the Fed cut rates, we could see a short-term rally in the stock market, particularly in interest-rate-sensitive sectors such as real estate and tech. However, if the Fed holds steady and signals that inflation remains a concern, markets could react negatively, especially given the elevated expectations for a pivot.
The upcoming CPI and PPI reports will be critical in shaping the Fed’s outlook and, consequently, market sentiment in the days leading up to the meeting
Wrap Up
This week, markets will hinge on key inflation data and important earnings reports. While investors are hoping for signs that inflation is under control, uncertainty remains. Be prepared for potential volatility as both economic and corporate data provide new clues about the health of the economy. Next week’s FOMC decision will be a pivotal moment for investors, with the potential to shape market performance for the rest of the year.
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