The Week Ahead.

The Week Ahead.

U.S. stocks finished higher on Monday as investors aim to recover from a downbeat month this week, with critical data ahead.

?? DJIA +0.62%, S&P 500 +0.63%, NASDAQ +0.84%

Stocks started a new week by continuing Friday’s advance following Federal Reserve Chairman Jerome Powell’s speech in Jackson Hole, Wyoming. The speech was generally considered “mildly hawkish” as the Fed Chair sounded cautious and vague over where monetary policy is headed in the near-term.

Both investors and Fed officials alike will focus on key data releases later this week that will cover the central bank’s favorite inflation gauge, the PCE Deflator, and August’s nonfarm payrolls. Inflation readings and labor reports continue to serve as a gauge for U.S. monetary policy.

The economic calendar was very light on Monday. The Dallas Fed manufacturing index for August came in better-than-expected at -17.2, forecasts were for -21.6, indicating a sign of improvement but still reflecting sluggish activity.

In bondland, U.S. Treasury yields retreated moderately ahead of a big week of employment and inflation data. The fed sensitive 2-year yield ended lower by less than 1 bps point at 5.048%, while the 10-year yield finished down 2.9 bps at 4.210%.

Meanwhile, the U.S. Treasury also held a slew of auctions covering 3-and 6-month bills, along with 2-and 5-year notes. MarketWatch reported that analysts viewed Monday’s sale of $46 billion in 5-year notes as “solid” and the $45 billion 2-year note auction as “even stronger.”? ?????????

On the international front, stocks in China finished up 1% but off their intraday highs as the country’s Finance Ministry and stock-market regulator introduced measures to encourage stock buying.

In other markets, oil futures finished mixed, with the U.S. benchmark (WTI) settling up 0.3% at $80.10/barrel on NYMEX, while the international (Brent) finished down 0.1% at $84.42/barrel on ICE Futures Europe. Natural gas prices finished up 1.5%, settling at $2.58/mmBtu. Lastly, gold futures settled higher at $1,946.80/oz or +0.4% on COMEX, as the U.S. dollar and bond yields eased.

Looking Ahead

Investors are in a “wait and see” mode this week as inflation and employment data will likely set the tone for monetary policy expectations going forward. Overall, it has been a tough month for investors as both the S&P 500 and Nasdaq are on track for their worst month of the year, down roughly as of today’s close at 3.4% and 4.5% respectively according to Refinitiv data.

We remain strategically defensive and are monitoring any potential catalysts that could signal a recovery or further declines in equity markets. In addition, this week’s data releases will be very critical and test the resolve/vitality of a variety of Fed related narratives that are currently circulating on Wall Street.

Stay Tuned!? ?????


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?? What We’re Also Following Today

  • [12:05-11:56 ET] China: China's Foreign Minister Wang Yi and US Commerce Secretary Raimondo agreed to meet at least once a year … Wang Yi also discussed concerns over investment limits and sanctions … Wang Yi discussed issues including tariff, chips policy with Raimondo … China: The Wang meeting with Raimondo was rational, frank and constructive.
  • [AUG 26, 12:11 ET] Fed's Mester: Current outlook is for one more rate hike, though not necessarily in September.

Newswire reports from FinancialJuice


?? Key Events This Week:

  • Tuesday (Aug. 29): S&P Case-Shiller home price index (20 cities), Job openings (JOLTS), Conference Board Consumer Confidence
  • Wednesday (Aug. 30): ADP employment (Aug.), U.S. GDP (revision) Q2, U.S. Trade Balance in Goods / Trade Deficit (preliminary), Retail & Wholesale Inventories (preliminary), Pending Home Sales (July)
  • Thursday (Aug. 31): Initial Jobless Claims, Personal Income & Spending, PCE Deflator, Chicago PMI/Business Barometer
  • Friday (Sep. 1): U.S. Nonfarm Payrolls / Unemployment Rate / Hourly Wages (Aug.), ISM Manufacturing (Aug.), Construction Spending (July)


?? Last Week’s Chart

Wells Fargo Investment Institute, “Looking Ahead,” August 25, 2023.

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MCF Capital Management, LLC is an independent, family-run, financial advisory firm that manages investment portfolios for individuals and businesses through Quantitative Market Data Analysis.

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THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INVESTMENT ADVICE.?

???SOURCES:?Refinitiv, Dow Jones NewsPlus, MarketWatch, Wall Street Journal, Barron’s, FinancialJuice, Investing .com, CNBC, Wells Fargo Investment Institute, TradingView

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