Weekly Market Analysis: Recap and Forecast. The Week of September 9th, 2024

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The market started out September in the red sea after a weaker than expected jobs report fanned fears of a steeper-than-expected economic slowdown and possible a recession, ending the week on all indexes with the worst starts to the month of September in over a decade. The S&P fell 4.3% last week, its worst week since March 2023. The Dow fell 2.9%, also its worst week since March 2023. The Nasdaq fell 5.8%, its worst week since January 2022. Fed-funds futures swung in both directions on Friday amid some confusion over how to interpret post-data remarks made by Fed Waller and Fed Williams. Job report last Friday failed to fully settle the question of how big September’s Fed rate cut might be.

As mentioned on Friday, inflation data is back at the forefront again for some market participants, after taking a back seat to labor-market readings in the last few months. Some Wall-street experts suggest that August CPI report this Wednesday could be an important deciding factor as to whether the Fed will settle the debate of a 25 bps, or 50 bps rate cut on Sept. 18. But a 50 bps cut could send the signal that we are definitely going into a recession. The question is whether a 50 bps rate cut would mean the Fed has made mistakes by going too far and too long with restrictive interest rates and therefore a recessionary environment is now more probable?

However, the S&P 500 is still trading at roughly 21 times next year’s earnings, or a level that does not imply a recession is on the way. Financial-market participants are going to be “laser-focused” on what Fed Chair Powell says at his press conference on Sept. 18, and whether he drops any hint that suggests Fed officials are “afraid of how fast things are softening and are ready to do more,” according to some experts. For now, Wall Street is expecting Wednesday’s CPI data to add to a recent trend of good news on inflation. Then on Thursday, Weekly Initial Jobless Claims and the August Producer-Price Index (PPI) are set to arrive. Friday brings a Consumer-Sentiment reading for September and the import-price index for August.

U.S stock market started out September in the red sea after a weaker than expected jobs report fanned fears of a steeper-than-expected economic slowdown and possible a recession, ending the week on all indexes with the worst starts to the month of September in over a decade. The S&P fell 4.3% last week, its worst week since March 2023. The Dow fell 2.9%, also its worst week since March 2023. The Nasdaq fell 5.8%, its worst week since January 2022. Fed-funds futures swung in both directions on Friday amid some confusion over how to interpret post-data remarks made by Fed Waller and Fed Williams. Job report last Friday failed to fully settle the question of how big September’s Fed rate cut might be.

As mentioned on Friday, inflation data is back at the forefront again for some market participants, after taking a back seat to labor-market readings in the last few months. Some Wall-street experts suggest that August CPI report this Wednesday could be an important deciding factor as to whether the Fed will settle the debate of a 25 bps, or 50 bps rate cut on Sept. 18. But a 50 bps cut could send the signal that we are definitely going into a recession. The question is whether a 50 bps rate cut would mean the Fed has made mistakes by going too far and too long with restrictive interest rates and therefore a recessionary environment is now more probable?

However, the S&P 500 is still trading at roughly 21 times next year’s earnings, or a level that does not imply a recession is on the way. Financial-market participants are going to be “laser-focused” on what Fed Chair Powell says at his press conference on Sept. 18, and whether he drops any hint that suggests Fed officials are “afraid of how fast things are softening and are ready to do more,” according to some experts. For now, Wall Street is expecting Wednesday’s CPI data to add to a recent trend of good news on inflation. Then on Thursday, Weekly Initial Jobless Claims and the August Producer-Price Index (PPI) are set to arrive. Friday brings a Consumer-Sentiment reading for September and the import-price index for August.

Last week, $SPY dropped below its 50sma support to range support at $540 after it cracked below $553 support per our forecast. Same with $QQQ, it cracked $468 support and traded below its 100sma and closed at $450 range support. This week, if $SPY can hold $540 and gets back over $546, it may rebound back to $550, then test $553-$555 now resistance. If $SPY drops below $538, look for it to trade to $535 then $530. Under $530, there’s room to $523. $QQQ holds $450, look for it to trade to $457-$460, then over $461.50 to $466-$468 now resistance. Under $448, $QQQ may trade to $444, then $440, then $1 below.

This week, we should see more volatility to continue in otherwise quiet September month. We’ll focus on the indexes $SPY & $QQQ and Tech stocks to capture some volatility moves and some notable earnings like $ORCL, $GME, $ADBE, $RH. Until then, have a wonderful September and get ready for busy fall season. Namaste!!!