Weekly Market Commentary: September 3-9, 2023
The Economy Is Hanging In There
Stocks closed lower last week, even as the latest data shows the U.S. is still doing well from an economic standpoint. Not a lot of new numbers were released, but the ones that were generally surprised on the upside. One standout was the Institute for Supply Management’s report on services sector activity in August, which unexpectedly jumped to its highest level since February. The report revealed that new orders were growing at a faster pace, and inventories were on the rise.
Export orders were also strong. However, this positive data was marred by news that Chinese government employees will be banned from using iPhones going forward. China is Apple’s largest foreign market, and Apple incurred $200 billion in losses following the announcement. Apple’s stock took an additional blow when details about its new iPhone 15 were leaked, revealing that the new phone will be more expensive than its predecessors.
On the jobs front, last week’s initial jobless claims report came in lower than expected, falling to 216,000 new claims, the lowest level in six months and the fourth consecutive week of declines. And continuing claims fell to 1.68 million, the lowest level since mid-July.
Still, the Apple news, plus declines in NVIDIA and other chipmakers, pushed the overall market down last week. U.S. Treasury yields also popped back up, with the two-year note yield crossing back over the 5% threshold on Thursday.
Last week’s data — plus this week’s consumer price index (CPI) and producer price index (PPI) reports — will give the Federal Reserve a lot to chew on during their meeting on Sept. 19-20. And then there’s this: U.S. gross domestic product (GDP) came in at 2% for both the first and second quarters. The latest forecast is showing 5.6% growth in the third quarter. That could play into the Fed’s decision about whether to continue its series of interest rate hikes or stay put for now. Dallas Federal Reserve Bank President Lorie Logan said last week that it “could be appropriate” to skip an increase at their next meeting. However, she indicated the Fed is still dead set on its mission to get inflation down to 2%.
Coming This Week
No data or speakers are scheduled for Monday or Tuesday. But then we’ll get the latest CPI number on Wednesday. According to the forecast, we could see an uptick in inflation.
The latest producer price index PPI numbers will follow on Thursday. If the costs of manufacturing decline, it could mean a drop in consumer prices over the next few months.
We will also see U.S. retail sales, business inventories and initial jobless claims on Thursday.
We’ll cap off the week with U.S. import prices, industrial production and preliminary consumer sentiment numbers on Friday.
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