The S&P 500 index ended the week with a 0.6% gain, while the Dow Jones Industrial Average and Nasdaq also saw modest gains. Inflation remained stable, with the Fed’s preferred inflation gauge showing a slight increase year over year. This, combined with fewer than expected weekly jobless claims and solid economic growth data, helped investors feel comfortable holding onto their stocks. Anticipation of further Fed rate cuts and an economy that is holding up provided a positive backdrop for the market.
The market experienced an overbought condition, prompting the trimming of some stock positions, including GE Healthcare, Meta Platforms, Alphabet, and Danaher. Costco reported earnings that were just okay but still highlighted reasons for investors to remain optimistic about the company’s future. Looking ahead, investors are anticipating the release of quarterly results from Constellation Brands and the government’s September employment report, which will provide important insights into the state of the labor market and potential implications for Fed rate cuts.
The upcoming employment report is expected to show 150,000 nonfarm payroll additions, a steady unemployment rate, and a 3.8% annual increase in hourly wages. This data will be closely watched by investors, given the Federal Reserve’s recent monetary easing cycle and increased focus on the labor market. Stable employment and wages are crucial for supporting consumer spending-driven economic activity and avoiding a recession. The report will be preceded by the ADP private payroll data, providing additional insights into hiring trends.
Constellation Brands is set to report its earnings, with a focus on its beer business and efforts to improve volumes and maintain strong margins. The company recently updated its guidance, reflecting challenges in its beer business and ongoing issues in wine and spirits. Investors will be looking for the company’s strategies to address these challenges and potentially enhance shareholder value. Additionally, the market will be watching for any updates on the company’s stock buyback program.
Looking at the week ahead, key economic indicators and corporate earnings reports will shape market sentiment. The ISM Manufacturing PMI, JOLTS Job Openings, and earnings reports from companies such as Paychex, McCormick & Co, and Nike will provide insights into the state of the economy. Investors will also await the release of the September employment report, which will be a significant market event with implications for the path of Fed rate cuts. Overall, investors will be monitoring various factors to make informed decisions in a dynamic market environment.
