Stock Market Update

[BRIEFING.COM] The winning week for equities ended on a strong note. The three major indices logged gains ranging from 0.5% to 0.7% and the Russell 2000 outperformed, jumping 2.5%. Upside momentum acted as its own buying catalyst, along with the belief that the economy is headed for a soft landing.

This morning's release of the preliminary University of Michigan Consumer Sentiment survey for September corroborated that view, showing that year-ahead expectations for personal finances and the economy both improved.

The market was already repricing rate cut expectations in front of the release, signaling optimism that the Fed may cut rates 50 basis points next week. The probability of a 25 basis points rate cut dropped to 53.0% from 72.0% yesterday, according to the CME FedWatch Tool.

Losses in some mega cap names limited gains in the S&P 500 (+0.5%) and Nasdaq Composite (+0.7%) while the Invesco S&P 500 Equal Weight ETF (RSP) closed 1.0% higher. NVIDIA (NVDA 119.10, -0.04, -0.03%), Apple (AAPL 222.50, -0.27, -0.1%), and Amazon.com (AMZN 186.49, -0.51, -0.3%) were standouts in that respect.

A solid decline in shares of Boeing (BA 156.77, -6.00, -3.7%) acted as a limiting factor for the Dow Jones Industrial Average (+0.7%) after news that its machinists union voted by 96% in favor of striking, which prompted warnings about a downgrade risk from Fitch ratings and Moody's ratings.

Still, many other stocks exhibited positive price action. All 11 S&P 500 sectors closed higher led by utilities (+1.4%) and communication services (+1.0%). 

The 10-yr note yield settled three basis points lower today, and six basis points lower this week, to 3.65%. The 2-yr note yield settled seven basis points lower today, and this week, to 3.58%.

• S&P 500: +18.0% YTD
• Nasdaq Composite: +17.8% YTD
• Dow Jones Industrial Average: +9.8% YTD
• S&P Midcap 400: +9.1% YTD
• Russell 2000: +7.7% YTD

Reviewing today's economic data:

• August Export Prices -0.7%; Prior was revised to 0.5% from 0.7%
• August Export Prices ex-ag. -0.6%; Prior was revised to 0.8% from 1.0%
• August Import Prices -0.3%; Prior 0.1%
• August Import Prices ex-oil -0.1%; Prior 0.1%
• September Univ. of Michigan Consumer Sentiment - Prelim 69.0 (Briefing.com consensus 68.1); Prior 67.9
  • The key takeaway from the report is that year-ahead expectations for personal finances and the economy both improved despite substantial uncertainty surrounding the election.

Looking ahead, Monday's economic lineup is limited to the September Empire State Manufacturing survey at 8:30 ET. Tuesday's economic releases include August Retail Sales at 8:30 ET and August Industrial Production and Capacity Utilization at 9:15 ET. Wednesday's calendar features August Housing Starts and Building Permits at 8:30 ET, along with the September policy decision by the FOMC at 2:00 ET. Thursday's lineup includes weekly jobless claims at 8:30 ET.