US Stock Market Update
The US stock market experienced a rebound on Friday, ending a three-day losing streak. The Dow Jones Industrial Average gained nearly 300 points, or 0.65%, to close at 46,247. The S&P 500 and Nasdaq Composite also rose, with gains of 0.59% and 0.44%, respectively. However, despite this rebound, the major US indices still closed the week in negative territory.
Weekly Performance
For the week, the Nasdaq slipped 0.7% and the S&P 500 lost 0.3%, each recording their first weekly decline in a month. The Dow edged 0.2% lower. This decline is a notable shift from the previous month’s trend.
Inflation Data
Core Inflation
The August personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, showed core inflation at a 2.9% annualized rate. This is in line with forecasts, and the all-items index rose 2.7% year-on-year and 0.3% for the month, also as expected.
Interest Rate Cuts
Markets are still pricing in two quarter-point rate cuts at the Fed’s upcoming meetings, consistent with the central bank’s own projections. This suggests that the Fed is likely to continue its monetary policy easing.
Economic Indicators
Jobs and Growth
The PCE report followed stronger-than-expected jobless claims data on Thursday and an upward revision in second-quarter GDP growth to 3.8%. Both indicators suggested a resilient economy, which some investors worry could give the Fed less reason to cut rates quickly.
Consumer Sentiment
Consumer sentiment in September held broadly steady, according to the University of Michigan survey, with only a slight dip from expectations. Sentiment was especially stable among wealthier households with greater stock holdings.
Technology Sector
The artificial intelligence sector continued to weigh down the market, with ongoing losses. Oracle, in particular, fell more than 8% this week as doubts grew over the durability of the AI trade.
Australian Market Outlook
The ASX is set for a positive open, with futures signaling a stronger start for Australian equities. The SPI 200 is up 0.2%. Local investors will be watching a series of economic releases this week, including August trade balance data, household spending, and the Reserve Bank’s financial stability review on Thursday.
Reserve Bank Meeting
Economists expect the RBA to keep rates on hold at 3.6% when it meets Tuesday. However, with inflation climbing to 3% in August, its highest in a year, analysts say the central bank is likely to adopt a less dovish tone, signaling that rate cuts may be further away than markets had hoped.
Conclusion
In conclusion, the US stock market experienced a rebound on Friday, but the major indices still closed the week in negative territory. The inflation data matched expectations, and markets are still pricing in interest rate cuts. However, economic indicators such as jobs and growth suggest a resilient economy, which could give the Fed less reason to cut rates quickly. The technology sector continues to weigh down the market, and the ASX is set for a positive open. The Reserve Bank’s meeting on Tuesday will be closely watched, with economists expecting rates to be kept on hold.
