The U.S. stock market seems positioned for a mixed start this morning, after a choppy session yesterday. The market environment has clearly become challenging, as we prepare to exit the month of September and close out the third quarter. As we were publishing this report, the S&P 500 Index futures were ahead just slightly in pre-market trading.
In economic news, this morning the final estimate for second-quarter GDP (Gross Domestic Product) was announced. The report showed that the economy expanded at an annualized rate of 2.1% during the quarter, which was in line with expectations. In addition, initial jobless claims for the latest recorded week came in at 204,000, which was a bit lower than many analysts had anticipated. Later today, pending home sales for the month of August will be published. Tomorrow, inflation will move back into the spotlight, as investors get a look at the PCE (Personal Consumption Expenditures) Price Index for the month of August. It is important that this report confirms that prices have been moving lower, as investors have been worried that the Federal Reserve will continue to lift interest rates, which could hinder the economy and drive bond yields higher.
In the corporate arena, we recently heard from Micron Technology (MU), a leading semiconductor company. Later today, we will receive a report from NIKE (NKE). Shares of the popular sneaker and apparel manufacturer have lost ground lately, and many investors may be looking for signs that business can rebound. Meanwhile, the third quarter will conclude tomorrow, and numerous corporations will be delivering their results in the weeks ahead. Analysts currently expect that the largest companies will post soft earnings comparisons for the third quarter, though results are expected to strengthen during the final months of the year.
From a technical perspective, the S&P 500 Index started to pull back at the start of August, and weakened further during the month of September. The broader average is currently sitting just above its 200-day moving average (situated near the 4,200 mark). It remains to be seen if this key technical level can provide support. From a sector vantage point, few areas of the market have managed to buck the downtrend over the past month. However, the energy issues have shown some strength, thanks in part to rising crude oil prices. Meanwhile, the technology issues have fallen out of favor with investors, which bears watching since these dynamic stocks provided much of the market leadership over the past year. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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