After experiencing their worst week of the year so far, the Dow Jones Industrials, NASDAQ, and S&P 500 all got the week off to a solid start, with each rebounding 1.2% on Monday. Ahead of the opening bell, the futures for the three major indexes were suggesting a slightly positive start to today’s session.
Last week’s weaker-than-expected jobs report may be fueling increased hopes that the Federal Reserve might take larger steps to reduce its overnight lending rate to help keep the economy from making a so-called ‘hard landing’. As it stands now, the fed funds futures are suggesting about a 70% probability that the central bank will cut interest rates by a quarter percentage point when it wraps up its Federal Open Market Committee (FOMC) meeting next Thursday. Looking further out, expectations are even loftier, with the Street looking for rates to be cut a minimum of one percent by the end of the year.
However, ahead of next week’s meeting, the Fed will have two more inflation reports to take into consideration. The Bureau of Labor Statistic’s Consumer Price Index (CPI) for August is set to be released on Wednesday. Consensus expectations are calling for prices to show a year-over-year increase of around 2.6%, down from the 2.9% reported for the month before. Meanwhile, analysts are calling for the Core PPI (which excludes the more volatile food and energy components) to rise 0.2%, both on a year-to-year and month-to-month basis.
This will be followed on Thursday by the Bureau’s Producer Price Index (PPI). This measure of the change in prices for goods sold by manufacturers is widely expected to show a month-over-month increase of 0.2% for August, versus a 0.1% uptick recorded in July. Meanwhile, the core PPI is also expected to advance 0.2%, compared to July’s flat reading versus June.
Also on Thursday, the Department of Labor will announce its latest figures for initial jobless claims. Analysts are looking for an increase of about 2,000 over the previous week, to 229,000. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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