Market Watch: Investors await monthly jobs report, Federal Reserve meeting, potential rate cut, strong quarterly earnings season, and Germany’s fractured politics following state elections.
Payrolls
The US Federal Reserve’s August jobs report is expected to provide key economic data, indicating the aggressiveness of monetary policy easing. The Fed is expected to begin reducing interest rates with a 25-basis point cut at the Sept. 17-18 meeting.
A weakening labor market could revive fears of a recession, potentially leading to a more aggressive reduction. Other updates on the labor market include Jolts job openings, ADP data on private sector hiring, and initial jobless claims.
Corporate Earnings
The S&P 500 index reported a 13% earnings growth rate in Q2, the strongest since Q4 2021. Tech, financials, and healthcare sectors saw over 20% growth, with materials and real estate reporting contractions.
The index has seen a broadening rally, with 61% of stocks outperforming in the past month. The Magnificent Seven group of tech giants underperformed other stocks.
German politics
German state elections have sparked concerns over the far-right Alternative for Germany (AfD), which won the first state legislature election in the country since World War Two.
German Chancellor Olaf Scholz criticized the results, stating they are damaging Germany’s economy, society, and reputation. The results could lead to infighting within the coalition and complicate European policy.
Economic Calendar
- US Market closed due to labour day
Must read book about investing – check here Market Watch Market Watch Market Watch
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark and tech-heavytouched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow,
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
arket Watch MMarket Watcharket Watch
MFitch Ratings has downgraded China’s credit rating outlook to “Negative” from “Stable” due to concerns over growing public debt and slowing growth in the world’s second-largest economy. The agency affirmed China’s rating at A+, citing increasing risks to China’s public finance outlook. Concerns over slowing economic growth have grown in recent months, with Fitch expecting gross domestic product growth to fall to 4.5% in 2024.
arket WatchMarket WatchMarket WatchMarket Watch Market Watch Fed Meeting Fed Meeting Fed Meeting Fed Meeting Fed Meeting Fed Meeting Fed Meeting Fed Meeting
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.
U.S. inflation data for February is expected to provide insights into the future direction of Federal Reserve monetary policy. The overall consumer price index (CPI) is expected to match the previous month’s pace of 3.1% annually, with the core CPI expected to slow to 3.7% from 3.9% in January. However, the month-on-month gauge is expected to shed light on price gains momentum.
Fed officials have made cooling inflation the main objective of interest rate hikes, which have brought borrowing costs to over two-decade highs. They suggest cuts may be coming later this year, but need more evidence that price growth is sustainablely easing back down to their 2% annualized target. Analysts at ING believe inflation is likely too hot for comfort.