The U.S. stock market may experience further turbulence this morning, after yesterday’s steep decline. The recent sell-off seemed to be due to a weak manufacturing activity report and rekindled concerns about valuations in the technology sector. In the coming days, investors will turn their attention to the nation’s employment situation, while also keeping an eye on corporate profits. As we were publishing this update, the S&P 500 Index futures were down about 20 points (-0.40%) in pre-market trading.
There are still several important economic reports set to be released this week. This morning, the July factory orders will be published. In addition, the Federal Reserve’s Beige Book report, which is a summation of economic conditions across the nation, will be presented this afternoon. Tomorrow, we will get a look at the weekly jobless claims, along with the monthly employment numbers from ADP (Automatic Data Processing). However, the main event this week will take place on Friday morning, when the government posts the August employment figures. Investors currently expect that roughly 165,000 jobs were added to the economy last month, which would be an increase from the July showing. The employment report should receive a good deal of attention from traders, especially given concerns that the labor market may be softening.
In corporate news, later today we will hear from Casey’s General Stores (CASY), a convenience retailer, along with Copart (CPRT), an automotive company. Tomorrow, Broadcom (AVGO), a leading designer of advanced semiconductors, will post its results. Broadcom is a sizable company and its report can impact the entire technology sector.
The S&P 500 Index proved quite resilient in the final weeks of August. However, September seems to be getting off to a rough start. Historically, the stock market has not performed well during the month of September, although it remains to be seen how events will unfold this time around. The Federal Reserve will probably cut interest rates later this month, however the market has probably already digested that information. Furthermore, there is the upcoming presidential election, and it is unclear how investors will react as this pivotal event approaches. Technically, it is not clear from yesterday’s decline that the market is going to change its direction entirely. Looking ahead, investors will probably want to see committed bulls and bargain hunters start to move into the market, as stocks start to look more attractive. – Adam Rosner
At the time of this article’s writing, the author had a position in Broadcom.
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