Back to top

View the PFP Archive

Market Moves You Need to See
Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research
  

Stocks Down On Friday And For The Week, Busy Week In Store For The Market This Week

Stocks closed lower on Friday and for the week, making it 3 down weeks in a row for the S&P 500 and Nasdaq.

Last Wednesday's FOMC announcement when the Fed expressed the likelihood of one more rate hike this year, along with fewer rate cuts next year, weighed on stocks.

While inflation has come down from last year's highs, it has proven to be stickier than expected. And the Fed does not expect to see their target rate of 2% achieved until 2025.

Moreover, with the Fed Funds rate expected to reach 5.6% by year's end, they revised their Fed Funds estimate for next year to 5.1% vs. their previous forecast of 4.6%, which implies just a 50 basis point rate cut next year vs. the anticipated 100 bps rate cut.

While the Fed has been saying all year they expected rates to stay higher for longer, they drove that point home last week with their increased growth forecast, and next year's reduced rate cut forecast.

We'll get another look at inflation this week when the Personal Consumption Expenditures (PCE) index comes out on Friday, 9/29. That's the Fed's preferred inflation gauge.

Last month's PCE report showed both the headline number increasing from the previous month with the headline y/y rate coming in at 3.3% vs. the previous reading of 3.0%, while the core rate (ex-food & energy) was up 4.2% y/y vs. the previous month's 4.1%.

Friday's PCE report is expected to show a mixed bag with headline inflation up 0.5% m/m, and 3.5% y/y (which would be an increase from the last report's 3.3%). The core rate is expected to be up 0.2% m/m, but the y/y rate is expected to come it at 3.9%, which would be down from the last reported 4.2%.

But there's plenty of other reports to get thru first: today we'll get the Chicago Fed National Activity Index, and the Dallas Fed Manufacturing Survey. Tomorrow we'll get the Case-Shiller Home Price Index, New Home Sales, the Richmond Fed Manufacturing Index, and Consumer Confidence. On Wednesday we'll get MBA Mortgage Applications, Durable Goods Orders, and the State Street Investor Confidence Index. On Thursday its the third and final estimate for Q2 GDP, Weekly Jobless Claims, Pending Home Sales, the Kansas City Fed Manufacturing Index, and Corporate Profits. And on Friday, aside the PCE report, we'll get Retail and Wholesale Inventories, the Chicago PMI, and Consumer Sentiment.

A jam-packed week of reports.

Additionally, the market will be contending with the expanded UAW strike against GM and Stellantis after no "serious progress" was made last Friday. They have not expanded their work stoppage at Ford at the moment amid progress in talks. But that could change in the absence of a deal or further progress in negotiations.

We also have just 6 more days for Congress to get a budget deal done by the end of the month to avoid a government shutdown.

At the moment, stocks are underwater for the month.

But regardless of how it ends, the odds of a bullish rest of the year look considerably better. History shows if the market is up more than 10% thru July, and August is down, the remainder of the year is up 100% of the time with an average gain of 9.9% (median of 8.7%).

Those are great odds.

And the end of September and the beginning of October can't come fast enough.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

Sponsor

Wall Street Caliber A.I. for the "Little Guy"

For years, Wall Street's been using A.I. to gain an edge. Now, a top tech company is "leveling the playing field."??

For over six years now, they've been developing a cutting edge A.I. algorithm that can predict future stock prices with astonishing accuracy.

Get the full story here

Most Popular Articles from Zacks.com

Image: Bigstock

September Correction: 5 Hints of a Turnaround

Corrections are ordinary and necessary during bull markets - especially in the seasonally weak month of September. Read More »

Image: Bigstock

3 Large-Cap Stocks to Buy Now During the September Pullback

Investors with long-term horizons should consider buying these proven large-cap stocks at potentially attractive levels. Read More »

Image: Bigstock

4 Insurance Stocks That Have Outperformed S&P 500 in a Year

The insurance industry has outperformed the Zacks S&P 500 composite and the Finance sector in the past year. Read More »

Image: Bigstock

4 Retail Stocks to Consider for Your Holiday Shopping List

We have highlighted four stocks from the Retail - Wholesale sector that look well-positioned based on their sound fundamentals. Read More »

Image: Shutterstock

Qualcomm (QCOM) at Crossroads in China: Should Investors Fret?

Much of the Qualcomm's hardships can be attributed to the continued Sino-U.S. trade spat. Read More »

Sponsor

Why Haven?t You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year.

Today you can access their live picks without cost or obligation.

See Stocks Free »

Image: Shutterstock

Bull of the Day: e.l.f. Beauty (ELF)

It's a thing of beauty when earnings continue to rise and analysts stay bullish on your company. Read More »

New Zacks Strong Buys for September 25th

Here are 5 stocks added to the Zacks Rank #1 (Strong Buy) List today. Read More »

 

Download our app for convenient on-the-go access to even more—daily and weekly newsletters published by Zacks experts, proprietary research and tools, and Portfolio Tracker on Zacks.com.

Download our Zacks App for Apple iOS
Download our Zacks App for Android

Visit Success Stories to hear how Zacks research, tools and portfolios help our members outperform the market.