Equities continued their decline last week after lower-than-expected unemployment claims and higher inflation led many to speculate that the Fed could continue to wreak havoc across the markets in their efforts to fight inflation.
All major US Indices, including the S&P 500, Dow Jones, and Nasdaq, are now firmly in the bear market territory, down at least 21%, and posting a three-quarter losing streak for the first time since 2009.
Stock Market Update. Picture by the author
Investor enthusiasm across the board, from institutional investors to retail shareholders, has weakened in recent weeks, with all signs pointing to a downturn over the next few quarters.
The week ahead will help market participants further gauge economic data, including PMI Data gauging business activity and labor market updates that will determine the impact on unemployment with the recent inflation and contraction in the economy.
Labor Market Updates
The Labor Department is set to release its August report for the Job Opportunities and Labor Turnover Survey on Tuesday. Consensus forecasts show that the number of job opening are cooling rapidly to 11.1 million,from 11.2 million in Juneand an all-time high of 11.9 million after companies started scaling back expansion efforts in the face of economic headwinds.
Two-Year Job Openings, Source:Investing
This will be followed by a report of the non-farm payrolls released on Friday, which will gauge the number of new jobs added by the US economy. Economic forecasts show that the labor market added 250,000 jobs in September, downfrom the 315,000 jobs added in August, while the rate of unemployment is expected to remain unchanged at 3.7%.
US Non-Farm Payrolls, Source:TradingEconomics
Both reports will be crucial data points for investors as a sign of rapid deterioration across the labor market could mean that the Federal Reserve slows down its efforts by lowering the pace ofrate hikes.
PMI Data
On Tuesday, the Institute for Supply Management is set to release two key reports regarding the Manufacturing and Non-Manufacturing PMI. The manufacturing PMI indexstood at 52.8 for the month of Augustbut is set to decline to 51.5 in September as demand continues to plummet due to high inflation and lower consumer confidence. A PMI lower than 50 could indicate that the US is officially in a downturn, which could occur if the Fed continues to tighten the economy with further rate hikes.
S&P 500 Chart
S&P 500 Chart, Source:TradingViewBottom Line
StockMarket Indices have continued their decline, now posting losses for three straight quarters as participants fear the state of the US Economy. The week ahead is packed with economic data, including labor market updates and PMI data, which should help the market further gauge sentiment and where the markets are headed next.
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