Markets hit a new milestone last week, with major indexes reaching another all-time highs, driven by positive GDP and inflation data. Second quarter GDP grew at a rate of 3%, meeting expectations and reassuring investors that the U.S. economy is not slipping into a recession. Additionally, the PCE inflation report came in at 2.2%, the closest it has been to the Federal Reserve’s 2% target, further bolstering investor confidence. These encouraging economic reports pave the way for more interest rate cuts and help reassure investors that The Fed’s decision to cut rates by 50 BPS was the right decision.
This week, attention turns to the labor market as September’s employment data is set to be released. The U.S. unemployment rate is expected to hold steady at 4.2%, but any surprises could unsettle investors, as seen in recent months. Last week’s jobless claims came in below expectations, providing a positive signal ahead of the upcoming unemployment report.
Also this week, Federal Reserve members are scheduled to speak daily, with the most important being Fed Chair Jerome Powell, scheduled to speak on Monday. Fed members have generally been upbeat, but cautious about their economy outlook, and that’s expected to remain the same this week following last week’s inflation and GDP data.
SPY Technical Analysis:
The S&P 500 seems unshakable right now, with buyers stepping in at every dip opportunity. As SPY hovers near the 600 mark, many may be tempted to short the market at these highs, but be careful betting against the trend for too long, especially as capital flows into different sectors of the market and widens market breadth. Coming into this week, buyers will need to break and hold 575.00 to continue their path to our next target of 482.00.