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Normally, the week prior to the long Labor Day weekend is very quiet for stock market news — many investors are just now re-directing their yachts back toward their slip — but this week is a bit of an anomaly: economic data abounds, along with major quarterly earnings reports from companies like Salesforce ((CRM - Free Report) and Best Buy ((BBY - Free Report) , both which outperformed expectations. As such, those of us who still have our ear to the ground may be better prepared to situate ourselves post-Labor Day.
Personal Consumption Expenditures (PCE) — the Fed’s preferred metric on inflation — came in-line on July month-over-month headline this morning at +0.2%, the same with core (ex-food and energy costs) for the month. Year over year, we see these numbers tick up: +3.3% on headline (above the +3.0% reported for June) and +4.2% on core (+4.1% previously). These increases were predicted by analysts, however — all of this PCE data has come in-line with estimates.
Prices for goods were down, while prices for services continued to rise. Whether or not this is a good sign for future PCE results remains to be seen, although it feels like progress (better than both going up, in terms of curbing inflation). And consider the levels we had been at — the high year-over-year headline was in June of 2022 at +7.1%; core year-over-year high was +5.4% in February of that year — getting back to 2021 levels, while still a ways from optimum, are still a sign of improvement. In fact, the last time we’d been at 2022 highs was back in the early 1980’s, when our inflation problem had spun out of control far worse than this time around.
Personal Income for July ticked down month over month — +0.2% versus +0.3% expected and for June — while Personal Spending last month was a tad higher than expected: +0.8% versus +0.7%. This is the second-highest month of spending this cycle, behind January’s +0.9%. We have seen signs of consumer spending coming down in separate metrics, but this one carries a bit more weight. Thus, we can determine that consumer activity remains high, even as their take-home pay nudges down. We can further expect to see changed behavior in this space over time.
Initial Jobless Claims reached 228K, below the 235K analysts were looking for and beneath the upwardly revised 232K reported the previous week, and the lowest weekly print in a month. Continuing Claims, always a week in arrears from new claims, came in at 1.725 million. This is the hottest we’ve seen since the seasonal week after Independence Day; only one week in the previous five had breached the 1.7 million level. All of this jobless claims data continues to exists within a comfortable range for the overall labor market. This will continue until we get (and stay) above 250K on initial claims and 1.8 million on continuing.
Pre-market futures are not bothered by any of this data, although we are currently off the pre-bell highs of +200 points on the Dow, +15 on the S&P 500 and +40 on the Nasdaq. Since the appearance of Fed Chair Jay Powell at the Jackson Hole symposium on Friday, market indices have climbed in each of the past four sessions, with green lights early today, as well.
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PCE Inflation In-Line With Expectations
Normally, the week prior to the long Labor Day weekend is very quiet for stock market news — many investors are just now re-directing their yachts back toward their slip — but this week is a bit of an anomaly: economic data abounds, along with major quarterly earnings reports from companies like Salesforce ((CRM - Free Report) and Best Buy ((BBY - Free Report) , both which outperformed expectations. As such, those of us who still have our ear to the ground may be better prepared to situate ourselves post-Labor Day.
Personal Consumption Expenditures (PCE) — the Fed’s preferred metric on inflation — came in-line on July month-over-month headline this morning at +0.2%, the same with core (ex-food and energy costs) for the month. Year over year, we see these numbers tick up: +3.3% on headline (above the +3.0% reported for June) and +4.2% on core (+4.1% previously). These increases were predicted by analysts, however — all of this PCE data has come in-line with estimates.
Prices for goods were down, while prices for services continued to rise. Whether or not this is a good sign for future PCE results remains to be seen, although it feels like progress (better than both going up, in terms of curbing inflation). And consider the levels we had been at — the high year-over-year headline was in June of 2022 at +7.1%; core year-over-year high was +5.4% in February of that year — getting back to 2021 levels, while still a ways from optimum, are still a sign of improvement. In fact, the last time we’d been at 2022 highs was back in the early 1980’s, when our inflation problem had spun out of control far worse than this time around.
Personal Income for July ticked down month over month — +0.2% versus +0.3% expected and for June — while Personal Spending last month was a tad higher than expected: +0.8% versus +0.7%. This is the second-highest month of spending this cycle, behind January’s +0.9%. We have seen signs of consumer spending coming down in separate metrics, but this one carries a bit more weight. Thus, we can determine that consumer activity remains high, even as their take-home pay nudges down. We can further expect to see changed behavior in this space over time.
Initial Jobless Claims reached 228K, below the 235K analysts were looking for and beneath the upwardly revised 232K reported the previous week, and the lowest weekly print in a month. Continuing Claims, always a week in arrears from new claims, came in at 1.725 million. This is the hottest we’ve seen since the seasonal week after Independence Day; only one week in the previous five had breached the 1.7 million level. All of this jobless claims data continues to exists within a comfortable range for the overall labor market. This will continue until we get (and stay) above 250K on initial claims and 1.8 million on continuing.
Pre-market futures are not bothered by any of this data, although we are currently off the pre-bell highs of +200 points on the Dow, +15 on the S&P 500 and +40 on the Nasdaq. Since the appearance of Fed Chair Jay Powell at the Jackson Hole symposium on Friday, market indices have climbed in each of the past four sessions, with green lights early today, as well.