Weekly Market Commentary September 23rd to September 27th 2024

With limited upside surprises in data released this week, the initial reaction is that the Federal Reserve made the correct decision in aggressively cutting the Fed Funds rate by 50 bps.

Much like the last few readings, all is quiet on the inflation front. Personal Consumption Expenditures (PCE), the Fed’s preferred gauge of inflation posted its lowest reading since February of 2021. Headline PCE came in at 2.2%, slightly lower than the 2.3% that was expected. Consumers are still experiencing slight price increases in the services sector while seeing relief in the goods sector, which declined 0.2%. Core PCE, which excludes food and energy prices, came in a little hotter at 2.7% but is not a cause for concern.

S&P Global US Manufacturing PMI posted its lowest reading since June of 2023, at 47.0. This was lower than the 48.6 that was expected. New Orders fell sharply and remain firmly in contractionary territory with a third consecutive reading below 50. Services decreased slightly but remained in expansionary territory posting a twentieth consecutive month of expansion.

All three major indexes finished higher for the week, with the S&P 500 and Dow Jones Industrials finishing at another weekly record high. The Dow closed at 42,313, up 0.59% for the week while the S&P 500’s last price was 5,738. The Nasdaq traded higher at 18,120 but failed to reclaim record levels it set earlier in the year. The yield curve continues to steepen with the 2-10 spread up to 19 basis points.

Key economic releases next week include ISM Manufacturing and Services Surveys and the Unemployment Report.