The major stock market indices closed lower on Friday, with the Dow Jones Industrial Average falling 1%, the Standard & Poor’s 500 Index dropping nearly 1 ¾% and the NASDAQ Composite losing 2.5%. Friday’s decline came after the U.S Bureau of Labor Statistics reported employment data softer than what the market was expecting. The report showed job gains of 142,000 last month, versus expectations for a gain of 161,000, while totals for the prior two months were revised lower. Some internals of the report showed relative strength, however, so it was a bit of a mixed bag.
When it was all said and done last week, the major averages posted notable losses, as the Dow lost 2.9%, the S&P shed 4.3%, and the NASDAQ Composite tumbled 5.8%, its worst weekly performance since 2022. The decline was driven by sentiment, momentum trading, and concerns over economic growth. So far at least, trading action is living up to the reputation that September is a bad month for the stock market. New this September, is that investors are readying for the Federal Reserve to deliver a long-awaited interest rate cut at their policy meeting next week. This signals an overall shift/pivot in monetary policy, away from the recent cycle of interest rate increases.
Probabilities are currently 100% the Fed will be cutting rates next week – broken down into a 70% chance for a ¼ point interest rate cut and a 30% chance for a ½ point rate cut – according to CME FedWatch. Before we get to next week, though, let’s take a quick look at the week ahead…
The Consumer Price Index (inflation reading) is scheduled to be released on Wednesday, with consensus estimates looking for a 2.6% year over year increase (3/10ths of a percent less than the prior reading). This is the last major economic number the Federal Reserve will get before their interest rate decision, and always has the potential to be market moving. Also this week, we’ll be getting two high profile earnings reports from the likes of Oracle after the closing bell today and Adobe on Thursday. Mostly, market participants will be thinking about the health of the economy and anticipating/gauging the Fed’s next move!
As always, call us with any questions you may have or if you would like to schedule a meeting.
All the best – Southport Station Financial Management, LLC