The U.S. stock market seems ready to advance this morning, as a new week on Wall Street unfolds. For some perspective, last week stocks sold off sharply, as a softer-than-anticipated employment report rekindled fears of a recession. It remains to be seen if the bulls can regain control of the market today. This week, investors will receive some important inflation data, along with a handful of corporate profit reports. A widely-anticipated presidential debate should also be a topic of conversation. As we were writing this piece, the S&P 500 Index futures were ahead roughly 30 points (0.55%) in early-morning trading.
In economic news, there are few notable reports due out today and tomorrow. However, the pace should pick up on Wednesday, when the August CPI (Consumer Price Index) is released. Economists currently expect the numbers to show that prices rose about 2.6% during the month, year over year, which would compare favorably to last month’s 2.9% reading. The PPI (Producer Price Index) will follow on Thursday. Most investors already think the Federal Reserve will cut interest rates at its meeting next week, but it is still important to see that inflation remains under control.
In the corporate sector, today Apple (AAPL) will be hosting a major product event, displaying its new iPhone. We will also hear from Oracle (ORCL), a database software provider. On Thursday, Adobe (ADBE), a designer of media software, will post its results. Some good news from these leading technology companies might help lift investor sentiment and rekindle interest in AI (artificial intelligence).
Technically, the stock market started to pull back at the start of September. The recent selling has put the S&P 500 Index back below its 50-day moving average, located around the 5,505 level. It remains to be seen if the bulls will be able to reassert control at this juncture, or if the market might head lower, and possibly revisit the low point hit in early August. From a sector perspective, the technology stocks are no longer displaying leadership, and it is unclear if the other equity groups (utilities and financials) are capable of driving the averages higher.
Sentiment has started to turn negative, with traders worrying that the economy is beginning to falter. At this point, investors probably do not want to see an unexpected surge in inflation, or economic reports that suggest weakness. Further, it will be important that the Federal Reserve acts decisively without undermining investor confidence. - Adam Rosner
At the time of this article’s writing, the author had a position in Apple.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
