US Market nervous of Fri's Jobs Report.
For a moment, I had assumed that Fri, 27 Sep 2024 positive sentiments will continue to power US market to another new high on Mon, 30 Sep 2024.
Why couldn’t I own such “premonition”, given the 3 favourable reports out on Friday, namely:
Personal consumption expenditure (PCE).
Consumer spending.
US Trade report.
(1) PCE - August 2024.
The Fed’s go to inflation report, the personal consumption expenditure (PCE) was marginally “better” than Wall Street expectations (see above), coupled with Monday being the last trading day of:
Calendar month September 2024.
Third quarter of 2024.
Headline inflation.
MoM was 0.1%.
YoY was 2.2% vs 2.3% (July 2019) vs 2.3% Wall Street's estimates. This is the lowest since February 2021.
Core inflation.
MoM came in at 0.1% vs 0.2% (July 2024) vs 0.2% Analysts' expectations.
YoY was 2.7% vs 2.6% (July 2024) vs 2.7% Market expectations. The annual rate was 0.1 percentage point higher than previous month.
(2) Consumer Spending report.
US consumer spending grew at a slower than anticipated rate for August 2024, in the face of continual easing inflation pressures.
According to data from US Commerce Department's Bureau of Economic Analysis (BEA), personal spending that accounts for more than two-thirds of economic activity:
Grew by 0.2%.
Slowing from an unrevised 0.5% gain in July 2024.
It was also marginally lower than economists estimates of 0.3%.
And August data was the slowest increase in 7 months.
US Trade Deficit.
Lastly, US trade report from the Commerce Department's Census Bureau showed US goods trade deficit contracted $8.6 billion (8.3%) in August to $94.3 billion, the largest dollar amount drop since November 2022. (see above)
This is because imports fell by 1.6%, mainly for industrial supplies and cars. At the same time, exports grew by 2.4%, led by consumer goods, other goods, and cars.
Inventories for wholesalers went up by 0.2%, and for retailers by 0.5%. This is expected to help offset the small negative impact of trade on GDP.
Due to better trade data, the Atlanta Fed has raised growth estimates by 3.1% for third quarter. This is higher than Q2 2024 finalized GDP of 3.0%.
This was a favourable +1.4% gain, compared to finalized Q1 2024 GDP data of 1.6%.
As confirmed by $JPMorgan Chase(JPM)$, Economist, Abiel Reinhart — "GDP data confirm moderate inflation and solid Q3 2024 GDP.
US Market - 30 Sep 2024.
Despite the 3 stellar economic reports, US market had a weak performance on Monday. (see below)
DJIA: +0.04% (+17.15 to 42,330.15).
S&P 500: +0.42% (+24.31 to 5,762.48).
Nasdaq: +0.38% (+69.58 to 18,189.17).
Many analysts have attributed market’s weak performance to Fed Chair Mr Jerome Powell’s speech at the Nashville’s National Association for Business Economists conference, at 1:55 p.m. ET.
He was there to deliver his assessment on US economy as well as his policy views.
Briefly his speech touched on several topics, namely — (a) economic outlook, (b) interest rate cut, (c) inflation, (d) labour market and (e) policy stance.
On interest rate cuts, Mr Powell has said that more are in the pipeline but suggested they would occur at a measured pace intended to support a still-healthy US economy.
His comments disappointed investors’ hopes that the Fed would implement another “jumbo” interest cut before the end of 2024.
The broad $S&P 500(.SPX)$ stock index initially fell -0.6% after his remarks. Thankfully, it managed to recover to close about 0.4 per cent higher.
US Market - This Week.
Non Farm payroll & Inflation reports will take centrestage on the run up to US election.
With a new calendar month arrival, economic reports’ focus will once again turn to US jobs and labour health status. (see above)
In this regard, US stock market may exhibit short term volatility once again.
Of the many economic reports out this week, below might be those that Wall Street will pay special attention:
Jobs opening & labour turnover surveys (JOLTs) - Tue, 01 Oct 2024.
ISM manufacturing - Tue, 01 Oct 2024.
ADP employment - Wed, 02 Oct 2024.
US weekly jobless claims - Thu, 03 Oct 2024.
US Non-farm payroll - Fri, 04 Oct 2024**
Apart from US economic reports, the Fed members are unusually active in their socialization endeavours on early on, when the next FOMC meeting is in Nov 6-7.
Mon, 30 Sep 2024 - Fed member Michelle Bowman speaks.
Tue, 01 Oct 2024 - Fed members Lisa Cook, Raphael Bostic, Susan Collins speak.
Wed, 02 Oct 2024 - Fed members Beth Hammack, Alberto Musalem, Michelle Bowman and Tom Barkins speak.
Thu, 03 Oct 2024 - Fed member Neel Kashkari & Raphael Bostic moderates discussion.
Fri, 04 Oct 2024 - Fed member John Williams gives an opening remark.
My viewpoints: (mine only)
The way I look at it, US investors are on the edge as market fears a potential recession persists.
They are eagerly awaiting all the job reports that will be published this week, hoping for positive news (only) to calm the nerves.
Does this present a “Buy” opportunity in blue chip stocks eg. the Magnificent Seven ? (see below)
Magnificent 7 - Past 5 days performances
Based on the Magnificent 7 past 5 trading performances, there are 3 stocks that are lower than it started 5 days ago.
They are:
(1) $NVIDIA Corp(NVDA)$.
It has fallen by -4. 15% due to (a) AI-fatigue and (b) news that the Chinese government has told firms in mainland to avoid using Nvidia chips.
Of course, this is due to high probability that the Biden administration is going to unleash more US sanctions on China.
Fared ‘worse’ than Nvidia, fallen by -4.45%. mainly due to overall negative market sentiments.
Analysts are quietly confident of IT giant’s impending Q3 2024 earnings results:
Earnings per share is projected to be $1.14 per share, that represents +34.12% YoY growth.
Revenue is anticipated to come in at $157.05 billion, that is a +9.76% YoY gain.
(3) $Microsoft(MSFT)$ .
In my post dated 25 Sep 2024, I have provided details on a plausible pull back for Microsoft.
Click here ! to read !
Coupled with the AI-fatigue that has plaqued US investors, it is not a surprise to find Microsoft consolidating.
After past 5 trading days, Microsoft has lost about -2.26% from its stock price.
Do you think there will be more volatility or celebratory rally, on the run up to US President election in November 2024 ?
Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks.
Do you think this will be a good or bad volatile week ?
Do you think it is strange that there are so much socialization by the Fed members this time round ?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!!
Great article, would you like to share it?