Weekly Stock Market Update & SPY Technical Analysis
This week, all eyes will be on labor market data, particularly Friday's U.S. unemployment report. Last month’s surprising spike in jobless claims rattled markets, sparking a wave of selling and raising concerns about a potential slowdown in consumer spending. The U.S. unemployment rate is expected to ease slightly from 4.3% to 4.2%, which could help calm fears of an impending recession.
Beyond the labor market, investors will also focus on the U.S. trade deficit report to assess trends in exports and imports. The trade deficit narrowed last month, driven by increases in exports of civilian aircraft, automotive vehicles, and energy commodities. Imports rose by 0.6% to $339 billion, leaving the trade gap at -$73.1 billion. While a trade deficit isn’t inherently negative—given the U.S. has operated with one for decades due to its reliance on imported goods and services—there are risks. A widening trade deficit could weigh on U.S. GDP growth, which investors are closely monitoring amid recession concerns.
Lastly, the release of the Fed’s Beige Book this week will provide valuable insights into how Federal Reserve members perceive current economic conditions.
SPY Technical Analysis
September has historically been a volatile month for markets, so investors are bracing themselves for the unexpected. Nvidia’s earnings last week weren’t enough to restore faith in the tech rally yet, so to kick off the new month, traders will be looking for signals of capital rotation into different sectors. Technology stocks are still strongly holding their highs, but they could move sideways for the month as other parts of the market gear up. If tech stocks move sideways, then it will likely force the S&P500 (SPY) to move sideways too. We will update our levels and projections accordingly.