The Dow Jones Industrial Average (DJIA) climbed to a new record high on Friday as traders analyzed new data suggesting continued progress in reducing inflation. Wall Street also posted its third straight week of gains.
The 30-share Dow rose 137.89 points, or 0.33%, to close at 42,313.00, marking both a session high and an all-time high. Meanwhile, the S&P 500 edged down 0.13% to 5,738.17 and the Nasdaq Composite fell 0.39% to 18,119.59, with Nvidia ( NASDAQ:NVDA ) down 2% to drag the tech-focused index along.
All three major indexes extended their weekly winning streak, with the S&P 500 and Dow adding about 0.6% for the week, while the Nasdaq gained nearly 1%.
Investors were encouraged by inflation data that could give the Federal Reserve more confidence to keep cutting interest rates.
August’s personal consumption expenditures (PCE) index, the Fed’s preferred gauge of inflation, rose 0.1 percent, in line with economists’ expectations. On a year-over-year basis, PCE rose 2.2%, slightly below the 2.3% forecast.
The coming week is packed with employment data, with the September jobs report on Friday taking center stage.
After sharp declines in job vacancies over the past two months, JPMorgan economists expect the August JOLTS report to show relatively flat job vacancies.
For the September jobs report, they forecast an increase of 125,000 jobs, slightly lower than August’s increase, but still slightly above the three-month average.
“The unemployment rate rounded to 4.2% in August and we believe it may round to 4.3% in next week’s report,” the economists said in a recent note.
Other major data releases due this week include the ISM Manufacturing report on Tuesday, ADP jobs data on Wednesday and jobless claims on Thursday, among others.
Also, Fed Chairman Powell is expected to make his first public comments on Monday after the recent major rate cut.
Nike’s results report is also in focus
In addition to a host of major financial announcements, investors will also be watching for some more earnings reports in the coming days, most notably that of Nike ( NYSE:NKE ) .
Barclays analysts expect the footwear and apparel giant to face “significant pressure” in the first quarter of 2025 amid “franchise lifecycle management” and China’s slowdown, however, expectations appear “sufficiently deregulated”, they note.
In the near term, analysts believe Nike’s guidance for fiscal 2025 “is achievable, with a return to wholesale, potential upside in NA DTC and a restocking cycle for Nike-brand footwear as we enter calendar 2025.”
Other companies reporting results this week include Lamb Weston Holdings Inc (NYSE:LW), Carnival Corp. (NYSE:CCL) and Levi Strauss (NYSE:LEVI), among others.
What analysts are saying about US stocks
Bank of America: “There have been many headwinds for stocks in recent weeks: the Fed, China and improving economic surprises. NFP and ISM Manufacturing PMI (both out this week) were the two weakest major figures in 2 million years. Therefore, we believe that minor weakness can be ignored by investors and only major failures rekindle recession fears. On the other hand, strong prints can further boost confidence in a soft landing.”
Goldman Sachs: “The total Return on Equity (ROE) premium over the median stock has widened to 390bp, the largest gap since 1980. Additionally, the gap between the highest and lowest ROE stocks in the market has widened significantly versus a decade ago, likely due to the use of financial leverage. A widening profitability gap may partly explain why investors pay a premium for “quality” factors today. But we expect these premiums to decline as the macroeconomic backdrop remains stable.”
Wedbush: “We believe the stage is set for tech stocks to move 10%+ higher by the end of the year and another 20% in 2025 as this tech market reaches its next phase with the AI revolution. In our view, as the Fed and Powell begin their aggressive rate-cutting cycle, a macroeconomic soft landing remains the way to go, and AI tech spending remains a generational spending cycle that is just beginning to hit the shores of the tech sector ».
Morgan Stanley: “Over the next 3-6 months, equity performance, both at the index and sector/factor level, will be determined more by labor data than anything else. The next round of employment data arrives at the end of this week. I think we would need an upside surprise to drive a sustainable cyclical shift in the US.”
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Reference;
Investing.com (2024) Saudi Arabia stocks lower at close of trade; Tadawul All Share down 0.37% By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/saudi-arabia-stocks-lower-at-close-of-trade-tadawul-all-share-down-037-3640413 (Accessed: 30 September 2024).
