Today is the last day of August, but the way this week has been going, there is bound to be some wishing that there were more days yet to come in August. The major indices have staged quite a comeback this week, along with a bounce last Friday, that has cut into monthly losses in a big way.
Entering today, the Nasdaq Composite is up 3.2% for the week and down 2.3% for the month, the Russell 2000 is up 2.7% for the week and down 5.0% for the month, the S&P Midcap 400 is up 2.5% for the week and down 3.1% for the month, the S&P 500 is up 2.5% for the week and down 1.6% for the month, and the Dow Jones Industrial Average is up 1.6% for the week and down 1.9% for the month.
Those results look destined to improve even more at today’s open thanks to a strong showing from Dow component Salesforce (CRM) after it reported better-than-expected results and issued Q3 and FY24 guidance above consensus estimates, some carryover momentum, and some palatable economic data that is supportive of something other than a hard landing.
Currently, the S&P 500 futures are up 10 points and are trading 0.2% above fair value, the Nasdaq 100 futures are up seven points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 161 points and are trading 0.5% above fair value.
Personal income increased 0.2% month-over-month in July (Briefing.com consensus 0.3%) following a 0.3% increase in June. Personal spending jumped 0.8% month-over-month (Briefing.com consensus 0.7%) following an upwardly revised 0.6% increase (from 0.5%) in June. The PCE Price Index was up 0.2% month-over-month and so was the core-CPE Price Index, both of which were in-line with expectations.
On a year-over-year basis, however, the inflation readings moved in the wrong direction. The PCE Price Index was up 3.3%, versus 3.0% in June, while the core-CPE Price Index was up 4.2%, versus 4.1% in June.
The key takeaway from the report would have to be the uptick in the year-over-year inflation readings. They weren’t of the eye-popping variety; however, they should catch the Fed’s eye as a basis not to cut rates anytime soon.
The same can be said for the initial and continuing jobless claims data. Initial claims for the week ending August 26 decreased by 4,000 to 228,000 (Briefing.com consensus 235,000) and continuing claims for the week ending August 19 increased by 28,000 to 1.725 million.
The key takeaway from the report is that initial claims — a leading indicator — continue to run at levels that are indicative of a tight labor market that goes hand-in-hand with an economy that is definitely not in a hard-landing pattern.
The Treasury market has taken this morning’s data in stride, having already made a big move itself this week that has been instrumental in the stock market making its big move. Currently, the 2-yr note yield is unchanged at 4.88%, but down 18 basis points for the week, and the 10-yr note yield is down two basis points to 4.10%, down 13 basis points for the week.
Similarly, the fed funds futures market hasn’t been rankled by the latest batch of economic data. The probability of a 25 basis points rate hike at the November FOMC meeting has dipped to 46.7% from 48.9% shortly before the release of the data.
—
Originally Posted August 31, 2023 – August closing on improved glide path
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Briefing.com and is being posted with its permission. The views expressed in this material are solely those of the author and/or Briefing.com and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.