Weekly Market Commentary September 2nd to September 6th 2024
Despite a holiday-shortened week there was a plethora of economic data, with none more important than the August employment report on Friday.
The ISM manufacturing PMI kicked off the week, increasing 0.4% to 47.2%, contracting for a fifth consecutive month. Overall, the pace of contraction slowed in August, but demand remains weak, as indicated by new orders and order backlogs declining from the previous month.
On Wednesday we got a prelude to the employment report with the Bureau of Labor Statistics releasing its Job Openings and Labor Turnover Survey (JOLTS) for July, totaling 7.7 million, declining more than expected and the lowest level since January 2021. Additionally, ADP reported its August private payroll report, which came in less than expected at 99k, while the prior month was revised from 122k to 111k.
Thursday delivered insight into economic activity within services, with the ISM services index report, which increased 0.1% from July to 51.5 and the sixth monthly expansion in 2024. The rise was attributable to increases in business activity, new orders, employment and supplier deliveries.
Wrapping up the week was the most anticipated economic data for the week as it was the last employment report from the Bureau of Labor Statistics before the FOMC meeting on the 18th and again came in weaker than forecasted. Non-farm payrolls increased 142k in August, below the 165k estimate, while the prior two months were revised down by a considerable 86k. The unemployment rate decreased modestly to 4.2% as forecasted. Another sluggish report confirmed what appears to be a weakening employment environment and support for the FOMC to begin cutting the Fed Funds rate this month.
The S&P 500 opened the week at 5,648, and declined each day closing the week at 5,408, down 4.3% and the worst week since March 2023. The Nasdaq Composite retreated 5.8% on the week.
In the U.S. Treasury market, rates declined throughout the week as markets priced in the likelihood of four 0.25 percent rate cuts in 2024. The 2-Year U.S. Treasury declined by 0.25% to 3.66%, which is the lowest level since September of 2022, while the 10-Year closed at 3.72% down 0.18% from the prior week and the lowest level since May of 2023. The longest yield curve inversion came to an end closing the week with a positive spread for the first time in 794 days, exceeding the prior 1978 record of 624 days.
Key economic releases next week include consumer credit and the producer (PPI) and consumer (CPI) price indices.
