Market Summary – September 5, 2023

Last Week’s Summary

  • S&P 500 Index rose 2.55%
  • International Equities rose 2.38%
  • Emerging Markets rose 1.52%
  • U.S. 10-Year Treasury Yield fell to 4.18%
  • Q2 GDP was revised to 2.1%
  • PCE Core Deflator rose to 4.2%
  • Nonfarm Payrolls increased by 187k

What to Watch for This Week

  • M, 9/4/23 U.S. markets are closed for Labor Day
  • T, 9/5/23 Durable Goods Orders, Factory Orders
  • W, 9/6/23 Trade Balance, ISM Services Index, Fed Beige Book
  • Th, 9/7/23 Initial Jobless Claims, PCE & PCE Core
  • F, 9/8/23 Consumer Credit

Weekly Market Recap

Equity markets saw a robust rally, marking the S&P 500 Index’s best weekly return since June. However, August brought the Index’s first monthly loss since February, indicating a mixed performance. The market rally waned towards the end of the week as bond yields climbed, partly due to a strong manufacturing report offsetting optimism generated by jobs data.

The jobs report depicted a labor market in a controlled moderation phase, with strong hiring, slower wage growth, and increased workforce participation. This moderation in labor dynamics allows the Federal Reserve room to consider pausing rate increases this month while keeping future options open.

In the bond market, auctions of Two- and Five-Year Treasury notes recorded the highest yields since before the 2008 Financial Crisis, reflecting a broader bond-market selloff ahead of another expected Fed rate increase. Encouragingly, the Fed’s preferred measure of underlying inflation showed the smallest consecutive increases since late 2020, boosting consumer spending.

However, consumer confidence dipped, attributed to job concerns, higher borrowing costs, and lingering inflation. Lastly, the revised data for U.S. gross domestic product in Q2 showed growth at a 2.1% annualized pace, slightly lower than earlier estimates, underscoring the evolving economic landscape.

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