Weekly review

At the beginning of the week, the financial markets were met with news of Israel's declaration of war on Hamas following a surprise attack launched by Hamas over the weekend. This development raised concerns of a broader regional conflict, though reports indicated that the Israel-Hamas war remained primarily a two-party conflict. Geopolitical tensions escalated on Friday when Israel issued an evacuation warning to 1.1 million residents in the northern Gaza Strip, potentially foreshadowing a ground attack in Gaza, further intensifying the conflict. Additionally, Iran's foreign minister warned of potential reactions in other areas due to Israel's continued blockade of Gaza.

Despite these geopolitical concerns, the stock market managed to perform relatively well during the week. Declining Treasury yields and technical buying, driven by perceptions of an oversold market due for a rebound, contributed to gains in the first half of the week. However, as the weekend approached, buyer conviction waned.

The week also saw the release of less favorable Producer Price Index and Consumer Price Index reports than investors had anticipated. Nevertheless, the 10-year Treasury note performed positively, benefiting from safe-haven flows and expectations that inflation rates would improve in the coming months as higher rates worked to slow the economy. Over the week, the yield on the 2-year note decreased by one basis point to 5.05%, while the 10-year note yield dropped by 15 basis points to 4.63%.

The Treasury market faced some disappointing auction results for the 3-year note, 10-year note, and 30-year bond, all of which saw relatively soft demand. This led to a notable increase in rates following the 30-year bond auction on Thursday. However, on Friday, the resurgence of geopolitical concerns prompted a rush of safe-haven flows that helped offset some of the earlier weakness.

Throughout the week, several Fed officials commented on the rise in long-term rates, suggesting that it had tightened financial conditions and could impact their policy rate decisions.

Oil prices experienced an uptick due to the growing geopolitical tensions, with WTI crude oil futures rising by 6.0% to $87.80 per barrel.

Among the S&P 500 sectors, eight posted gains, with the energy sector leading the way with a substantial increase of 4.5%. Conversely, the consumer discretionary sector recorded the most significant decline, falling by 0.7%.

The week marked the beginning of earnings season, with companies like JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C), and UnitedHealth (UNH) delivering generally positive results.

In other developments, the House failed to elect a new Speaker during the week. Rep. Steve Scalise (R-LA) secured the GOP conference vote but withdrew his candidacy after failing to garner sufficient support. This leadership void underscores the challenges the House faces in conducting its business and raises uncertainty about Congress reaching a budget agreement before the November 17th deadline.

On Monday, the stock market commenced on a downbeat note in response to Israel's declaration of war on Hamas following a surprise attack by Hamas over the weekend. However, stocks managed to rally in the afternoon session, closing near their daily highs. It's worth noting that the market's performance was accompanied by light trading volume, reflecting the uncertainty associated with the Israel-Hamas conflict. Some investors sought safety in Treasury futures during the Columbus Day holiday when the Treasury market was closed, contributing to the afternoon rally. The market also found support as the dollar gave up its early gains, and investors perceived a certain level of resilience, triggering short-covering activity and encouraging additional buying, as stocks were considered oversold. Oil prices trended higher due to concerns that the Israel-Hamas conflict could escalate into a broader regional issue. Notably, there was no significant U.S. economic data on Monday.

On Tuesday, the stock market concluded with gains driven by factors such as lower market rates, declining oil prices, and a weaker dollar. These factors took the forefront as worst-case scenarios related to the Israel-Hamas conflict failed to materialize. Throughout the morning, the major indices steadily rose, although they dipped from their highs around 1:00 p.m. ET. This dip coincided with Apple (AAPL) and Microsoft (MSFT) turning lower and a $46 billion 3-year note auction met with relatively soft demand. The 2-year note yield closed seven basis points lower at 4.99%, and the 10-year note yield dropped by 12 basis points to 4.66%. These moves were partially attributed to a safe-haven bid linked to the Israel-Hamas situation but were also fueled by a technical rebound from oversold conditions. Additionally, gains in the Treasury market were underpinned by the belief that the recent surge in long-term rates had effectively tightened financial conditions, potentially leading the Fed to maintain its policy rate at the upcoming October 31-November 1 FOMC meeting. Tuesday's economic data included the September NFIB Small Business Optimism survey, which slipped from 91.3 in August to 90.8, and the August Wholesale Inventories report, showing a 0.1% decline (compared to a consensus of -0.1%) following a revised 0.3% decline in July (revised from -0.2%).

Wednesday saw the stock market kick off and conclude the session on a positive note, with a brief dip into negative territory around 1:45 p.m. ET before rebounding from session lows. Notably, the S&P 500 and Nasdaq Composite closed near their daily highs, thanks in part to the strength of their mega-cap constituents. Interestingly, the morning saw stocks trending lower despite a decrease in long-term rates, which had been favoring equities recently. The 10-year note yield fell by seven basis points to 4.59%, while the 2-year note yield edged up by one basis point to 5.00%. Some attributed the morning's downward movement to lingering concerns related to reports of provocative actions by Iran-backed Hezbollah in the north. However, Israel dismissed these reports as a "false alarm." Other factors contributing to the mid-morning slide might have included caution ahead of the September Consumer Price Index report, set for release the following day at 8:30 a.m. ET, especially after the hotter-than-expected Producer Price Index data earlier in the day. Additionally, there may have been tax-related selling in anticipation of the October 16 deadline. During the afternoon session, numerous stocks recovered, riding the coattails of the mega-cap stocks. The Vanguard Mega Cap Growth ETF (MGK) closed the day 0.9% higher after initially being up by just 0.1% at its lowest point. Similarly, the Invesco S&P 500 Equal Weight ETF (RSP), which had been down 0.5% at its low, ended the session up 0.2%. Regarding economic data for Wednesday, the weekly MBA Mortgage Applications Index saw a 0.6% increase following a 6.0% decline in the prior week. The Producer Price Index for September showed a 0.5% month-over-month increase (against a consensus of 0.3%) following a 0.7% rise in August. Excluding food and energy, the core Producer Price Index rose by 0.3% month-over-month (compared to a consensus of 0.2%) after a 0.2% increase in August. Year-over-year, the PPI was up 2.2%, exceeding August's 1.6%, while the core PPI was up 2.7%, surpassing August's 2.2%. Notably, this report marked a disruption in the disinflation trend observed in producer prices, raising concerns among market participants about potential pass-through effects on consumers and the likelihood of higher rates persisting due to elevated inflation levels, which may not align with the Fed's desired trajectory.

Thursday marked a day of losses in the stock market, primarily driven by increasing market rates following the morning's economic data and less-than-stellar bond auction results, which created an underlying negative sentiment throughout the trading session. Initially, there was strength observed in the mega-cap sector, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average reaching their peak levels for the day, up 0.3%, 0.4%, and 0.2%, respectively. However, some mega-cap stocks experienced a downturn as the Treasury market saw another wave of selling coinciding with the conclusion of the $20 billion 30-year bond auction, which was met with disappointing demand. The 2-year note yield, which had reached 4.97% before the Consumer Price Index (CPI) data, increased by six basis points to 5.06%, while the 10-year note yield, which had reached 4.53% before the CPI data, climbed by 12 basis points to 4.71%. Geopolitical uncertainty still loomed over the market, and the strengthening dollar added to the challenges. The U.S. Dollar Index rose 0.7% to 106.58. During the session, the market-cap weighted S&P 500 declined by 0.6%, and the Invesco S&P 500 Equal Weight ETF (RSP) dropped by 1.3%. Analyzing Thursday's economic data, the Consumer Price Index (CPI) for September showed a 0.4% month-over-month increase (compared to a consensus of 0.3%), while core CPI, which excludes food and energy, rose by 0.3% (matching the consensus of 0.3%). The rise in total CPI was driven largely by a 0.6% increase in the shelter index. On a year-over-year basis, total CPI remained steady at 3.7%, with core CPI dipping to 4.1% from 4.3% in the 12 months ending in August. However, beneath the headline figures, there were some encouraging inflation readings: the all-items index, excluding shelter, increased by just 2.0% year-over-year, and the services index, excluding rent of shelter, rose by 2.8% year-over-year. Furthermore, the initial jobless claims for the week ending October 7 remained unchanged at 209,000 (against the consensus of 214,000), while continuing jobless claims for the week ending September 30 increased by 30,000 to 1.702 million. These data indicate that the low level of initial claims, which is a leading indicator, continues to align with a tight labor market that works in favor of the broader economy.

Friday saw mixed performance in the major indices, with a more negative trend underlying the broader market. The mega-cap sector exhibited relative weakness, impacting the S&P 500 and Nasdaq Composite, but many stocks recorded declines. Geopolitical concerns cast a shadow over sentiment as the weekend approached. News of Israel warning 1.1 million residents in the northern Gaza Strip to evacuate within 24 hours raised uncertainty. Simultaneously, Iran's foreign minister emphasized that Israel's ongoing blockade of Gaza could lead to reactions in other areas. This news prompted some safe-haven buying in Treasuries, although rates rebounded from their lows following the release of the preliminary University of Michigan Consumer Sentiment Survey. The survey revealed an increase in year-ahead inflation expectations to 3.8% from 3.2% and long-run inflation expectations to 3.0% from 2.8%. While geopolitical concerns were prevalent, the earnings landscape showed positive signs. Dow components UnitedHealth (UNH) and JPMorgan Chase (JPM) emerged as standout winners, alongside Wells Fargo (WFC), due to their better-than-expected earnings and guidance. Examining Friday's economic data, September Export Prices rose by 0.7%, with the prior figure revised to 1.1% from 1.3%. September Export Prices, excluding agriculture, increased by 1.0%, with the prior figure revised to 1.5% from 1.7%. September Import Prices inched up by 0.1%, with the prior figure revised to 0.6% from 0.5%. September Import Prices, excluding oil, dipped by -0.2%, with the prior figure revised to -0.2% from -0.1%. The preliminary University of Michigan Consumer Sentiment Survey for October reported a reading of 63.0 (compared to the consensus of 67.5), down from the prior reading of 68.1. The primary drag on consumer sentiment was high prices and inflation expectations. How this affects actual spending remains to be seen, but consumers' concerns about inflation contribute to the expectation that the Federal Reserve will maintain high interest rates for an extended period.

The Dow Jones Industrial Average closed the week at 33,670, marking a 0.8% increase for the week and a 1.6% gain year-to-date. Meanwhile, the TSX, the Canadian stock market index, saw a 1.1% weekly increase, bringing its year-to-date performance to a 0.4% gain. The S&P 500 Index closed the week at 4,328, with a 0.4% weekly rise and a strong 12.7% year-to-date increase. In contrast, the NASDAQ experienced a slight decline of -0.2% for the week but maintained a robust 28.1% year-to-date performance. On the global front, the MSCI EAFE, an international equity index, showed a notable 2.4% increase for the week, contributing to a 5.0% year-to-date growth. As for bond yields, the 10-year Treasury Yield closed at 4.62%, with a minor -0.2% weekly decrease and a 0.7% year-to-date gain. The 10-year GoC Yield in Canada mirrored the same weekly and year-to-date figures, closing at 3.97%. In the commodities market, oil prices continued to climb, reaching $87.69 per barrel, marking a 5.9% weekly increase and a substantial 9.3% rise year-to-date. Bond investments also saw positive weekly performance, with bonds closing at $93.62, representing a 0.9% gain for the week. However, Canada Investment Grade Bonds showed a 0.6% weekly increase but remained down by -1.2% year-to-date. The Canadian dollar (CAD) held steady with a slight 0.4% increase against the US dollar (USD), but it remained down by -0.8% year-to-date in the currency exchange market, with the exchange rate at $0.73 CAD/USD.

Previous update:

The stock market displayed mixed performance in the first week of the new month. While the S&P 500 and Nasdaq Composite posted gains of +0.5% and +1.6%, respectively, the Dow Jones Industrial Average and Russell 2000 experienced declines of -0.2% and -2.2%. Mega-cap stocks lent crucial support to the broader market, with the Vanguard Mega Cap Growth ETF (MGK) surging by 2.5%, outperforming the S&P 500's 0.5% gain. Conversely, the Invesco S&P 500 Equal Weight ETF (RSP) fell by 1.2%.

Out of the 11 S&P 500 sectors, eight ended the week with losses. The energy sector faced the most substantial decline at -5.4%, followed by consumer staples at -3.1%, and utilities at -2.9%. In contrast, the information technology sector recorded notable gains at +3.1%, with communication services close behind at +2.9%.

The energy sector's descent coincided with a drop in WTI crude oil futures, plummeting by 8.8% to $83.04 per barrel. This decline was partly attributed to concerns regarding weakening demand in an environment of slower growth influenced by rising interest rates, although oil prices had experienced significant gains leading up to the week.

Despite a growing sentiment that both the bond and stock markets were oversold in the short term and due for a rebound, Treasury yields continued to ascend. The 10-year note yield surged by an additional 20 basis points during the week, reaching 4.78%, while the 2-year note yield rose by two basis points to 5.06%.

The upward movement in yields reflected a recalibration of expectations for rate hikes, particularly following the release of the stronger-than-anticipated September employment report. Nonfarm payrolls for September far exceeded expectations, adding 336,000 jobs compared to the consensus estimate of 158,000. Additionally, upward revisions to data from July and August contributed an additional 119,000 jobs. Concurrently, average hourly earnings growth moderated slightly to 4.2% year-over-year from 4.3% in August.

Other notable data during the week included the September ISM Services PMI, which revealed a modest slowing in the pace of expansion compared to August, and the September ISM Manufacturing PMI, indicating a deceleration in the rate of contraction compared to August.

Furthermore, political uncertainty loomed over the market as the House voted 216-210 in an unprecedented move to remove Kevin McCarthy as Speaker of the House. This development is likely to complicate negotiations aimed at preventing another government shutdown after November 17, as House proceedings will be halted until a new Speaker is elected.

On the first trading day of the new month and the second calendar day of the fourth quarter, the stock market displayed a familiar pattern, struggling alongside rising market interest rates. While the final standing for the S&P 500 may have appeared relatively stable, it masked underlying weakness.

The Invesco S&P 500 Equal Weight ETF (RSP) experienced a decline of 1.1%, with nine of the 11 S&P 500 sectors registering losses. The utilities sector, sensitive to interest rates, exhibited notable weakness, plunging by 4.7%. Another sector that lagged was energy, with a decrease of -2.1%, in tandem with the slide in oil prices ($89.71 per barrel, -1.10, -1.2%). This decline was partly influenced by a stronger dollar and a Reuters report indicating a rise in OPEC's oil output in September.

The relative strength observed in the mega-cap space proved to be the differentiating factor for the market-cap weighted S&P 500 and Nasdaq Composite. Despite an attempt by the S&P 500 to breach the 4,300 level at its peak during the day, it fell short, and this failure, coupled with the 10-year note yield reaching 4.70% at its daily high, prompted additional selling activity.

Turning to the economic data from Monday, the September ISM Manufacturing PMI recorded a reading of 49.0%, exceeding the consensus estimate of 47.8%. This marked an improvement from the August reading of 47.6%. While the September figure still indicates contraction in the manufacturing sector, it suggests that the pace of contraction has slowed compared to the previous month. Notably, September marked the 11th consecutive month with a PMI reading below 50.0%. The report hints at the economy potentially heading for a soft landing rather than a hard one.

Additionally, total construction spending for August exhibited a 0.5% month-over-month increase, in line with the consensus estimate, following an upwardly revised 0.9% gain in July. Both total private and total public construction reported month-over-month gains of 0.5% and 0.6%, respectively. On a year-over-year basis, total construction spending saw a solid increase of 7.4%. This data indicates a balanced strength in August, driven by both private and public construction spending, positioning total construction spending comfortably outside the realm of a hard landing scenario.

On Tuesday, the stock market faced challenges once again due to the rising market interest rates. Early efforts to rally in both the stock and bond markets quickly dissipated as yields surged following the release of the August JOLTS (Job Openings and Labor Turnover Survey) data at 10:00 a.m. ET. The JOLTS report revealed a substantial increase in job openings compared to July, with the number rising from 8.920 million to 9.610 million. This pointed to a persistent tightness in the labor market. Yields promptly rose, while stocks turned downward in response to the data release. The surge in interest rates raised concerns about valuations and intensified competition for stocks as higher-yielding, risk-free alternatives gained appeal. Additionally, the rapid rate increases raised apprehensions about the budget deficit and associated supply challenges required to fund the expanding deficit in the context of weakening demand. Tuesday's market losses were widespread, with growth stocks and mega-cap companies among the leading decliners. The market also grappled with news regarding a motion to remove Kevin McCarthy (R-CA) from the position of Speaker of the House, adding to the day's uncertainties.

Wednesday saw the major indices navigating a choppy session, ultimately concluding near their highest levels of the day. The oversold Treasury market's price action provided a reason for the oversold stock market to stage a rebound. Mega-cap stocks played a crucial role in the movement of the indices on this day. Apple (AAPL), for instance, managed to gain ground despite a downgrade from KeyBanc Capital Markets, shifting from an "Overweight" rating to "Sector Weight." Semiconductor and growth stocks also lent additional support to the broader market, contributing to the positive sentiment. However, it was not only mega-cap stocks that participated in the rebound; the Invesco S&P 500 Equal Weight ETF (RSP) recorded a 0.6% gain, underscoring the broader market's resilience. Turning to the economic data from Wednesday, the ADP Employment Change report revealed that private payrolls increased by 89,000 in September, falling short of the consensus estimate of 150,000, following a revised gain of 180,000 in August. The weekly MBA Mortgage Applications Index showed a 6.0% decline, with both purchase and refinance applications dropping by 6.0% and 7.0%, respectively. The ISM Services PMI for September dipped to 53.6%, slightly lower than the consensus estimate of 53.7%, down from the August reading of 54.5%. Despite the slight deceleration, the reading still indicated expansion in services sector activity, marking the ninth consecutive month of growth. Factory orders experienced a robust surge in August, with a 1.2% month-over-month increase, surpassing the consensus estimate of 0.3%. Excluding transportation, factory orders rose by 1.4% month-over-month, continuing the growth trend. Shipments of manufactured goods also increased by 1.3% month-over-month, reaffirming the economy's growth momentum. Lastly, the weekly EIA crude oil inventories reported a draw of 2.22 million barrels, following a previous week's draw of 2.17 million barrels. This data highlighted fluctuations in crude oil inventories.

Thursday brought some turbulence to the stock market following Wednesday's gains. Unlike the previous day, there was a disconnect between the stock market and Treasury yields, with stocks experiencing a sluggish performance despite a modest decrease in yields. Despite some early losses, several mega-cap stocks managed to rebound, allowing the major indices to finish the day well above their lowest points, although they still registered modest declines. Investors appeared cautious ahead of the release of the September jobs report scheduled for Friday at 8:30 a.m. ET. This cautious sentiment followed the release of the weekly initial jobless claims report on Thursday morning, which indicated a low level of initial claims at 207,000. Such a low level typically signifies a tight labor market and a robustly performing economy. Treasury markets initially reacted with volatility to the data but soon stabilized. Among the S&P 500 sectors, seven recorded declines, with the consumer staples sector experiencing the most significant drop at -2.1%. This decline was largely attributed to a substantial loss in Clorox (CLX) following disappointing guidance. Turning to Thursday's economic data, the weekly initial claims report showed 207,000 claims, slightly below the consensus estimate of 225,000. The prior week's figure was revised to 205,000 from 204,000, and weekly continuing claims stood at 1.664 million, with the prior week's number revised to 1.665 million from 1.670 million. This data underscored not only a tight labor market but also an economy operating at a healthy pace. In August, the trade balance reported a deficit of -$58.3 billion, surpassing the consensus estimate of -$65.1 billion. This marked an improvement from the revised figure of -$64.7 billion in the previous month. The drop in imports for August, compared to the increase in exports, is expected to positively impact the Q3 GDP calculations.

Friday, the major stock indices concluded the session near their highs, with the S&P 500 gaining 1.2% and surpassing the 4,300 level. The Nasdaq Composite, Russell 2000, and Dow Jones Industrial Average also posted gains of 1.6%, 1.0%, and 0.9%, respectively. However, at the opening of the trading day, the situation appeared different as stocks initially moved lower following a significant uptick in Treasury yields. The 2-year and 10-year Treasury yields reached 5.13% and 4.87%, respectively, triggered by a much stronger-than-expected nonfarm payrolls report for September, which showed a gain of 336,000 jobs (above the consensus estimate of 158,000). This data led market participants to contemplate the potential impact of robust payroll figures on Federal Reserve policy. The fed funds futures market reacted to these developments, indicating a 31.8% probability of another rate hike in November (up from 20.1% the previous day) and a 42.6% probability of a rate hike in December (up from 33.1% the previous day), according to the CME FedWatch Tool. However, Treasury yields retraced their gains from the post-employment report highs, possibly due to the belief that the bond market had been oversold in the short term. Additionally, investors found some positive aspects in the fact that average hourly earnings growth moderated to 4.2% year-over-year from 4.3% in August. As Treasury yields pulled back from their peaks, stocks responded favorably, initiating a reversal that was likely influenced by short-covering activity. Mega-cap stocks led the rebound, with the Vanguard Mega Cap Growth ETF (MGK) gaining 1.7%. Market breadth also favored advancers over decliners as the recovery gathered momentum. Reviewing the economic data from Friday, the Nonfarm Payrolls report for September showed a significant gain of 336,000 jobs, well above the consensus estimate of 158,000. Nonfarm Private Payrolls also exceeded expectations at 263,000, while Average Hourly Earnings increased by 0.2% (below the consensus estimate of 0.3%). The Unemployment Rate remained at 3.8%, and the Average Workweek held steady at 34.4 hours. In another report, consumer credit decreased by $15.6 billion in August, exceeding the consensus estimate of $12.0 billion. This decline was primarily driven by reduced borrowing needs and tighter lending standards amid rising interest rates, marking the largest drop in nonrevolving credit since December 2015.

The Dow Jones Industrial Average closed the week at 33,508, experiencing a decline of 1.3% for the week but maintaining a year-to-date gain of 1.1%. Similarly, the TSX closed at 19,269, reflecting a 1.4% decrease for the week and a year-to-date decline of -0.6%. In contrast, the S&P 500 Index showed a 0.5% increase for the week, bringing its year-to-date performance to a positive 12.2%. The NASDAQ also saw a slight 0.1% increase for the week, contributing to an impressive year-to-date gain of 26.3%. The MSCI EAFE index closed at 1,983, marking a notable -2.4% decline for the week, though still maintaining a modest year-to-date increase of 2.0%. Bonds were valued at $94.03, reflecting a 1.1% decrease for the week, but they remained slightly down by -0.9% year-to-date. Canada Investment Grade Bonds experienced a -0.5% weekly decline, resulting in a year-to-date decrease of -1.8%. The 10-year GoC Yield stood at 4.15%, indicating a 0.1% increase for the week and a 0.9% year-to-date increase. Meanwhile, the 10-year Treasury Yield reached 4.58%, with a 0.2% weekly increase and a 0.7% year-to-date gain. Oil prices closed at $82.72 per barrel, reflecting an -8.9% weekly decline but maintaining a year-to-date increase of 3.1%. The Canadian/USD Exchange rate closed at $0.73, experiencing a -1.4% weekly decline and a year-to-date decrease of -1.2%.

Previous update:

The past week in the stock market exhibited a mixed performance at the index level, with some recovery attempts scattered throughout. Notably, the Nasdaq and Russell 2000 managed to secure modest gains, while the Dow Jones Industrial Average and the S&P 500 experienced declines of 1.3% and 0.7%, respectively. There is a growing belief that the stock market may be due for a rebound following its steep losses in September. However, the upward trajectory of long-term interest rates has acted as a restraining force on stock prices.

During this week, the 10-year Treasury note yield saw a notable increase of 13 basis points, adding to a total surge of 48 basis points for the month, reaching a level of 4.57%. Conversely, the 2-year note yield decreased by eight basis points for the week but still posted an overall increase of 18 basis points for the month, settling at 5.04%.

The concern among stock market participants isn't solely focused on the magnitude of these rate increases but rather the rapid pace at which they are occurring. Moreover, the recent surge in rates doesn't seem to be linked to fears of imminent rate hikes by the Federal Reserve.

Notably, the futures market for federal funds indicates a mere 14.2% probability of a 25-basis point rate hike at the upcoming November FOMC meeting, contrasting with 27.5% just a week ago and 62.3% a month ago, as reported by the CME FedWatch Tool. This evolving understanding may raise questions about the driving forces behind the Treasury market, with potential factors including the Federal Reserve's ongoing Quantitative Tightening (QT) efforts, other central banks possibly divesting from Treasuries to bolster their currencies, and concerns regarding the budget deficit.

In addition to interest rate movements, market participants also cited seasonality as a possible factor influencing market sentiment. Historically, September has often been the weakest month of the year for the S&P 500.

This week, economic data releases included a disappointing report on August new home sales, a relatively low number of weekly jobless claims, and encouraging inflation data in the form of the core-PCE Price Index for August.

In the energy sector, WTI crude oil futures experienced a substantial increase of over $7.00 per barrel this month, closing at $90.78 per barrel at the end of the week. This surge raised concerns about inflation expectations, rising gasoline prices, and potential implications for consumer spending.

Within the stock market, the S&P 500 utilities sector witnessed the most significant decline of the week, falling by 7.0%, followed by the consumer staples sector, which decreased by 2.1%. Conversely, the energy sector managed to eke out a 1.3% gain, while the materials sector saw a marginal increase of 0.2% during the week.

On Monday, the major stock market indices recorded modest gains, but beneath the surface, the market displayed a mixed performance, especially in light of the continued rise in long-term interest rates. Despite this, the major indices closed near their session highs. The 10-year Treasury note yield increased by ten basis points, reaching 4.54%, its highest level in almost 16 years. Initially, equities faced some selling pressure due to this rate hike and the lingering downside momentum from the losses of the previous week. However, the market quickly rebounded, driven partly by a reversal in mega-cap stocks. Additionally, the S&P 500 briefly dipped below the 4,305 support level, prompting overdue buying interest as investors perceived stocks to be temporarily oversold. There was no notable U.S. economic data reported on Monday.

On Tuesday, a different story unfolded as all major indices experienced declines of over 1.0%, erasing the modest gains from Monday. The negative sentiment was partly attributed to ongoing concerns about rising interest rates. These concerns were exacerbated by comments from JPMorgan Chase CEO Jamie Dimon, who expressed uncertainty about whether the world is prepared for a 7% interest rate, and Minneapolis Fed President Kashkari, who suggested that another rate hike might be necessary before year-end if the economy exceeds expectations. Seasonal factors, with September historically being the S&P 500's worst month, added to the negative market dynamics. Losses were widespread, with mega-cap and semiconductor stocks leading the downturn, while the rate-sensitive utilities sector suffered the most significant decline, dropping by 3.1%. Notably, Amazon (AMZN) faced notable downside pressure following news that the FTC and 17 state attorneys general were suing the company for allegedly maintaining an illegal monopoly. Regarding economic data released on Tuesday, the FHFA Housing Price Index for July increased by 0.8%, the S&P Case-Shiller Home Price Index for July rose by 0.1% (falling short of expectations), and consumer confidence for September came in at 103.0, showing a decline driven by weakening consumer expectations for future business conditions, job availability, and incomes, which could potentially translate into softer spending activity.

On Wednesday, the stock market initially showed signs of a rebound following sharp losses on Tuesday and throughout the month. However, as oil prices and market rates began to rise, equities started to lose momentum. Despite this, a late-afternoon surge in mega-cap stocks helped the major indices recover from their lows. Notably, this afternoon improvement occurred even as yields and crude oil futures remained elevated. Although the performance at the index level appeared mixed, the market exhibited positive breadth, with advancers outnumbering decliners at both the NYSE and the Nasdaq. Mega-cap stocks, semiconductor stocks, and growth stocks outperformed, contributing to the broader market's support. In terms of economic data, the MBA Mortgage Applications Index for the week saw a 1.3% decline, driven by a 1% drop in purchase applications and a 2% decrease in refinance applications. Additionally, total durable goods orders for August increased by 0.2% month-over-month, defying expectations of a -0.2% decline. When excluding transportation, durable goods orders were up 0.4%, surpassing the consensus estimate of 0.3%. Notably, nondefense capital goods orders excluding aircraft, which serve as a proxy for business spending, surged 0.9% month-over-month, rebounding from a 0.4% decline in July.

On Thursday, the stock market exhibited some early choppiness but soon gained upward momentum following the previous day's late bounce. This positive trend was underpinned by the belief that the stock market was due for a rebound after experiencing significant losses in September. Although all major indices recorded gains, they closed off their daily highs, with the S&P 500 finishing just shy of the 4,300 mark. The Treasury market's price action continued to exert influence on stock movements, with equities holding up reasonably well even as market rates reached their session highs. Some mega-cap stocks, including Apple (AAPL) and Microsoft (MSFT), initially faced declines but later rebounded, contributing to the overall market's recovery. Regarding economic data for Thursday, initial claims for the week ending September 23 increased by a mere 2,000 to 204,000, falling below the consensus estimate of 215,000. Continuing jobless claims for the week ending September 16 rose by 12,000 to 1.670 million. Notably, the low level of initial claims suggested a tight labor market. In addition, the third estimate for Q2 GDP remained unchanged at 2.1%, as expected. However, the GDP Deflator saw a favorable downward revision to 1.7% from the consensus estimate of 2.0%. Benchmark revisions revealed that real GDP had increased at an annual rate of 5.6% from the second quarter of 2020 through the first quarter of 2023, representing a 0.2 percentage point reduction from previous indications. The noteworthy takeaway from the report was the improved deflator reading, marking the lowest level since the second quarter of 2020.

On Friday, the stock market initially displayed strength, building upon the rebound that had commenced on Wednesday afternoon. At their morning highs, the S&P 500, Nasdaq, and Dow Jones Industrial Average were up by 0.8%, 1.4%, and 0.7%, respectively. However, as the day progressed, the major indices reversed course and closed near their session lows. The Nasdaq managed to eke out a minor gain, largely due to the relative strength of mega-cap stocks, while the other major indices ended the day in negative territory. Market breadth also exhibited a mixed performance. The early upside in stocks was partly fueled by a decline in market interest rates, which provided initial support. However, yields later rebounded from their daily lows, coinciding with the deterioration of stock prices. Additionally, favorable economic data released on Friday morning acted as another positive factor during the early trading session. In other news, the United Auto Workers (UAW) called for an additional 7,000 workers at Ford (F) and General Motors (GM) to go on strike at noon ET, but no additional strikes were organized at Stellantis (STLA). Regarding economic data on Friday, personal income for August increased by 0.4% month-over-month, slightly below the consensus estimate of 0.5%, following a 0.2% increase in July. Personal spending also rose by 0.4% month-over-month, matching the consensus estimate of 0.5%, after an upwardly revised 0.9% gain in July. The PCE Price Index showed a 0.4% increase, in line with expectations, while the core PCE Price Index rose by 0.1%, falling short of the 0.4% consensus forecast. On a year-over-year basis, the headline PCE Price Index increased by 3.5%, up from an upwardly revised 3.4% in July, while the core PCE Price Index decelerated to 3.9% year-over-year from an upwardly revised 4.3% in July. Overall, the core price growth was slightly cooler than anticipated, although the report was not sufficiently weak to prompt a sudden shift in the market's expectations for the federal funds rate. The Advanced Trade in Goods deficit narrowed to $84.3 billion from $90.9 billion in August. Wholesale inventories declined by 0.1% in August, contrasting with a revised 0.2% decline in July. Retail inventories, on the other hand, increased by 1.1% in August, following a revised 0.5% rise in July. The Chicago PMI for September fell to 44.1, missing the consensus estimate of 48.3 and down from 48.7 in August. The final reading of the University of Michigan Consumer Sentiment Index for September was 68.1, slightly surpassing the consensus estimate of 67.7 and up from the preliminary reading of 67.7. The final reading for August had been 69.5, while one year ago in September, the index stood at 58.6. Notably, inflation expectations were revised upward compared to the preliminary readings for the month, but they still reflected some moderation in expectations when compared to the final readings for August.

In the world of financial markets this week, the Dow Jones Industrial Average concluded at 33,508, marking a 1.3% decline for the week and a 1.1% increase year-to-date. Similarly, the TSX closed at 19,549, showing a 1.2% decrease for the week and a 0.8% gain for the year. Meanwhile, the S&P 500 Index stood at 4,288, registering a 0.7% decline for the week but an 11.7% increase year-to-date. The NASDAQ managed to eke out a 0.1% gain for the week, pushing its year-to-date performance to a robust 26.3%. In the international scene, the MSCI EAFE * index reported a 2.0% decrease for the week, with a 4.1% year-to-date gain. Bonds recorded a value of $94.03, representing a 1.1% decline for the week and a negative 0.9% return year-to-date. In the realm of bond yields, the 10-year Treasury Yield reached 4.58%, indicating a 0.2% increase for the week and a 0.7% uptick year-to-date, while the 10-year GoC Yield stood at 4.03%, with a minor 0.1% increase for the week and a 0.7% gain year-to-date. Oil prices settled at $90.91 per barrel, marking a 1.0% increase for the week and a notable 13.3% rise year-to-date. Lastly, the Canadian/USD Exchange rate was at $0.74, showing a 0.5% decrease for the week but a 0.2% increase year-to-date.

Previous update:

On Monday, the stock market experienced mixed performance following a sell-off on Friday. Major indices ended the day relatively unchanged, retreating from their earlier highs, mirroring the behavior of mega-cap stocks. The Russell 2000, in contrast, displayed weakness with a 0.7% decline. This indecisiveness stemmed partly from caution ahead of the upcoming Federal Open Market Committee (FOMC) meeting scheduled for Wednesday. Apple (AAPL) provided some support to the major indices as it responded positively to analyst comments. However, Ford (F), General Motors (GM), and Stellantis (STLA) faced notable setbacks. The United Auto Workers (UAW) rejected a Stellantis offer to increase pay by nearly 21% over the contract term, including an immediate 10% raise. Monday's economic data included the NAHB Housing Market Index, which dropped to 45 in September (compared to the consensus of 50) from its August level of 50.

On Tuesday, major indices ended the day in negative territory but rebounded significantly from their intraday lows, largely influenced by fluctuations in mega-cap stocks. The Vanguard Mega Cap Growth ETF (MGK) initially dipped 1.0% but closed with a 0.2% loss, showcasing the afternoon improvement. Crude oil experienced an intraday pullback, initially surpassing $92.00/bbl before settling slightly lower at $90.49/bbl, contributing to the market's afternoon recovery. The overall pessimistic tone was, in part, a result of apprehension leading up to Wednesday's FOMC announcement, which includes updates on the Summary of Economic Projections and dot plot. Rising market interest rates added another layer of challenge. Instacart (CART) made headlines as it priced its IPO at $30/share on Monday night, opening for trading at $42 but later retracing a significant portion of its initial gains. Tuesday's economic data featured housing starts, which hit their lowest level in August (1.283 million) since June 2020. Building permits, a leading indicator, increased by 6.9% month-over-month, exceeding expectations at 1.543 million, with permits for single units rising by 2.0%.

On Wednesday, the stock market opened with a positive inclination as market participants awaited the release of the FOMC decision scheduled for 2:00 p.m. ET. Early gains were supported by declining oil prices and lower market interest rates. While the Nasdaq initially experienced modest losses due to underperforming mega-cap stocks, the breadth of market participation was positive, and other major indices were in positive territory. Following the September FOMC Statement, both the stock and bond markets saw volatile price movements. As anticipated, the FOMC voted unanimously to maintain the target range for the federal funds rate at 5.25-5.50%. While the policy directive itself saw minimal changes, the market's attention was directed towards the Summary of Economic Projections and dot plot. These revealed two crucial insights: (1) The expectation of policy rates remaining higher for an extended period, and (2) Fed officials revising their outlook, indicating less rate-cutting in 2024 compared to their June forecasts. Market volatility persisted during Fed Chair Powell's press conference. Powell emphasized the Fed's cautious approach to potential policy changes, mentioning the possibility that the neutral rate may be higher than the long-term rate of 2.5%. He suggested that this might explain the economy's greater resilience than anticipated. The market's concern didn't stem from a decisively hawkish Fed but rather from the continued absence of a dovish stance. Later in the afternoon, stocks saw a steady decline, primarily led by mega-cap stocks, with the S&P 500 finishing just above the 4,400 level. Klaviyo (KVYO), which priced its IPO at $30, initially surged to $37 before retracing along with the broader market during the afternoon session. Regarding Wednesday's economic data, the weekly MBA Mortgage Applications Index showed a 5.4% increase, driven by a 13.0% surge in refinance applications and a 2.0% rise in purchase applications. The weekly EIA crude oil inventories reported a draw of 2.14 million barrels, in contrast to the previous week's build of 3.96 million barrels.

Thursday saw a bearish trend in the stock market as major indices faced persistent pressure throughout the day, eventually closing near session lows with losses ranging from 1.1% to 1.8%. The S&P 500, which had concluded Wednesday just above the 4,400 level, remained below it throughout Thursday's session. The primary driver of this weakness was the surge in market interest rates that began Wednesday afternoon following the Fed's hawkish stance. The breadth of losses was extensive, with mega-cap and growth stocks leading the decline. Notably, the Vanguard Mega Cap Growth ETF (MGK) dropped 2.0%, while the Russell 3000 Growth Index fell 1.9%. Amidst the overall downturn, there were a few standout winners with specific catalysts supporting their relative strength on an otherwise downbeat day. Paramount Global (PARA), Warner Bros. Discovery (WBD), and FOX Corp. (FOXA) all registered gains, possibly due to optimism stemming from reports of a potential resolution to the Hollywood writers' strike. Another top performer was Splunk (SPLK), buoyed by news of its acquisition by Cisco (CSCO) for $28 billion in cash, equivalent to $157.00 per share. In terms of economic data, the weekly Initial Claims came in at 201K, below the consensus of 225K, indicating that the labor market remains tight, reinforcing the Fed's commitment to a restrictive interest rate approach. The September Philadelphia Fed Index posted -13.5 (compared to a consensus of -2.0), reflecting deteriorating conditions. Meanwhile, the Q2 Current Account Balance was -$212.1 billion, beating the consensus of -$222.0 billion, and August Existing Home Sales came in at 4.04 million, falling short of the consensus of 4.10 million, underscoring the challenges in the housing market due to higher mortgage rates and prices. Additionally, August Leading Indicators declined by 0.4%, matching expectations, highlighting ongoing economic concerns.

Friday's trading session began on a positive note, with major indices showing modest gains in the aftermath of this week's sell-off. The early optimism can be attributed, in part, to a buy-the-dip mentality, which was further bolstered by the Treasury market's price action. However, as the day progressed, the market started to lose steam, with declines becoming more pronounced in the afternoon. While there was a brief attempt at a rebound, major indices ultimately settled near their daily lows. This downturn was attributed to comments from San Francisco Fed President Daly, a 2024 FOMC voter, who echoed the emerging consensus within the Fed that further tightening may be necessary. Interestingly, the 2-year note yield, which tends to be more sensitive to changes in the fed funds rate, didn't exhibit a strong reaction to Daly's remarks. Technical factors may have played a larger role in the afternoon's decline, particularly after the S&P 500 struggled to surpass initial resistance at 4,361, reaching a high of 4,357 on Friday. In other developments, the United Auto Workers (UAW) confirmed reports of progress in labor negotiations with Ford (F). However, the UAW indicated that reaching agreements with Stellantis (STLA) and General Motors (GM) would require more substantial effort. Consequently, the UAW expanded its strike to encompass all GM and STLA parts and distribution centers starting at noon ET. Regarding economic data, Friday's calendar included the preliminary September S&P Global US Manufacturing PMI, which improved from August, registering at 48.9 compared to the prior month's 47.9. Despite this improvement, the reading remained below 50, indicating contraction. Additionally, the S&P Global US Services PMI, while still indicative of expansion, dipped to 50.2 in the preliminary September reading from August's 50.5.

The TSX closed the week at 19,784 points, reflecting a 4.1% decline for the week but maintaining a year-to-date gain of 2.1%. Meanwhile, the Dow Jones Industrial Average concluded the week at 33,964 points, experiencing a 1.9% decline over the week while posting a year-to-date increase of 2.5%. The S&P 500 Index closed at 4,320 points, marking a 2.9% weekly decrease but showing a substantial year-to-date gain of 12.5%. The NASDAQ index stood at 13,212 points, with a weekly loss of 3.6% but an impressive year-to-date increase of 26.2%. The MSCI EAFE index settled at 2,071 points, reflecting a weekly drop of 1.8% and a year-to-date gain of 6.5%. In the bond market, Canadian Investment Grade Bonds observed a 1.2% decline, contributing to a year-to-date decrease of 1.0%. The 10-year GoC Yield closed at 3.91%, with a 0.2% weekly increase and a year-to-date gain of 0.6%. Similarly, the 10-year Treasury Yield ended the week at 4.43%, experiencing a 0.1% weekly uptick and showing a year-to-date gain of 0.6%. In the commodities market, the price of oil per barrel stood at $90.34, reflecting a 0.5% weekly decrease but maintaining a substantial year-to-date increase of 12.6%. Bond prices were at $95.03, with a 0.5% weekly drop but a minor year-to-date decline of -0.3%. Lastly, the Canadian/USD Exchange rate was at $0.74, showing a 0.5% increase over the week and a year-to-date gain of 0.7%.

Previous update:

The Dow Jones Industrial Average managed to secure a modest gain over the past week, whereas the S&P 500 and Nasdaq experienced slight declines. The initial part of the week was characterized by relative quiet in terms of market-shaping events, coupled with somewhat subdued market participation. However, the latter half of the week featured several noteworthy events that culminated in a quarterly options and futures expiration day on Friday. Notably, both the S&P 500 and Nasdaq dipped below their respective 50-day moving averages. Despite being on track for a positive week, the major indices saw a retreat on Friday, ending the week on a somewhat lower note. Interestingly, among the 11 sectors of the S&P 500, eight managed to finish with gains. However, the heavyweight information technology sector took a hit, declining by 2.2%. Within the tech sector, Apple (AAPL) faced challenges, dropping by 1.8% during the week amid ongoing scrutiny in China and following its product event unveiling the iPhone 15. Additionally, Adobe (ADBE) struggled, falling by 5.6% following disappointing fiscal Q4 guidance. The semiconductor sector also grappled with weakness, possibly stemming from Arm's (ARM) successful IPO on Thursday and reports that Taiwan Semiconductor Manufacturing Co. (TSM) was delaying chip equipment shipments. Consequently, the PHLX Semiconductor Index slipped by 2.5%. Netflix (NFLX), despite its strong performance this year, experienced a notable drop of 10.4% following its disclosure that its ad business does not yet significantly contribute to its overall revenue. The combined impact of losses in large-cap stocks weighed on index performance. The Vanguard Mega Growth ETF (MGK) declined by 0.8%, and the market-cap weighted S&P 500 fell by 0.2%. In contrast, the Invesco S&P 500 Equal Weight ETF (RSP) experienced a more modest decline of 0.1%. Several corporate developments also influenced selling activity. Airlines like Spirit Airlines (SAVE), Frontier Group (ULCC), Delta Air Lines (DAL), and American Airlines (AAL) issued warnings regarding their Q3 outlooks, citing rising fuel costs as a contributing factor. Furthermore, the United Auto Workers initiated targeted strikes at three manufacturing plants, one for each of the Big Three automakers, due to the failure to reach a new contract agreement. Nevertheless, Ford (F), Stellantis (STLA), and General Motors (GM) closed the week with gains of 2.5%, 5.6%, and 3.0%, respectively.

Amidst these developments, market participants closely examined a slew of economic releases. Chief among them was the August Consumer Price Index (CPI) report, which revealed a robust 0.6% increase in total CPI, in line with expectations. Core CPI, which excludes food and energy, rose by 0.3%, slightly surpassing the 0.2% consensus. Notably, year-over-year figures showed total CPI at 3.7% (versus 3.2% in July) and core CPI at 4.3% (versus 4.7% in July). The key takeaway from this report is that core inflation, a metric closely monitored by the Federal Reserve, continues to show improvement on a year-over-year basis. However, it remains notably above the Fed's 2.0% target, indicating a persistent inflationary trend. While this might not necessarily prompt the Fed to further raise interest rates at this point, it does reinforce the Fed's inclination to maintain a "higher for longer" approach. Treasury markets responded reasonably to this week's inflation data, which lent support to stocks. Yields did rise, but the increases were not characterized by panic. The 2-year note yield climbed by seven basis points to 5.04%, while the 10-year note yield also increased by seven basis points, reaching 4.33%. Oil prices remained a prominent focus throughout the week, with WTI crude oil futures surging by 4.2% to reach $91.00 per barrel. Looking ahead, the upcoming week will see the Federal Reserve meeting with a policy decision announcement scheduled for 2:00 p.m. ET on Wednesday. Market participants are not anticipating a rate hike and will instead focus on the updated Summary of Economic Projections and the tone set by Fed Chair Powell during his press conference.

On Monday, the week commenced with the major indices posting gains, although trading volume at the NYSE was relatively light. Both the S&P 500 and Nasdaq closed near their day's highest points, placing them above their 50-day moving averages. The market received a significant boost from the strength exhibited by some mega-cap stocks. The Nasdaq saw a notable 1.1% climb, and the market-cap weighted S&P 500 rose by 0.7%. The Invesco S&P 500 Equal Weight ETF (RSP) also managed to secure a 0.2% gain. A standout performer for the day was Tesla (TSLA), surging by 10% after receiving an upgrade from Morgan Stanley, shifting from Equal Weight to Overweight. Although market breadth leaned towards the positive side, it did so modestly, with advancers slightly outnumbering decliners by an 11-to-10 margin at the NYSE and the Nasdaq. The day's trading reflected a lack of strong conviction, potentially in anticipation of a busy week of economic data, including the August Consumer Price Index, August Producer Price Index, and Retail Sales report.

Tuesday's session started with a positive undercurrent despite a mixed performance among the major indices. Early on, the S&P 500 and Nasdaq displayed some weakness, albeit with relatively minor losses, placing them below their 50-day moving averages. Meanwhile, the Dow Jones Industrial Average and Russell 2000 traded in positive territory, accompanied by a positive market breadth. The early lagging seen in the S&P 500 and Nasdaq was primarily attributed to weakness in the mega-cap sector and a substantial decline in Oracle (ORCL) following its earnings report and somewhat disappointing guidance. A mid-day push drove the S&P 500 briefly above its 50-day moving average, but it was unable to sustain that position, leading to increased selling activity during the afternoon session. Ultimately, the Dow Jones Industrial Average closed with a fractional loss, while the S&P 500 and Nasdaq Composite finished the day near their lowest levels. Apple (AAPL) exhibited weakness ahead of its closely-watched product event and faced a decline following the announcement of the iPhone 15 and other product updates. Additionally, rising oil prices, reaching their highest level since the previous November, added to the market's concerns. Tuesday's economic data included the August NFIB Small Business Optimism index, which declined from 91.9 to 91.3.

On Wednesday, the trading session was rather uneventful as the major indices experienced only modest gains or losses. The market saw a lack of strong conviction, with the advancing-declining line favoring decliners, resulting in choppy action during both the morning and afternoon sessions. Mega-cap stocks steered the market's direction, contributing to the overall mixed performance. Wednesday morning's Consumer Price Index (CPI) report indicated that core inflation, which is closely monitored by the Federal Reserve, continued to show year-over-year improvement. However, it remained well above the Fed's 2.0% target, suggesting a persistent quality that may not prompt the Fed to further raise interest rates at this juncture but would likely keep the central bank in a "higher for longer" stance. The Treasury market initially reacted to the data with some knee-jerk selling, but this quickly subsided, providing support for the stock market. The 2-year note yield briefly jumped to 5.07% after the data release but ultimately settled at 4.99%, one basis point lower than Tuesday's close. Similarly, the 10-year note yield, which had briefly reached 4.34%, ended two basis points lower than Tuesday, at 4.25%. Airline stocks faced notable weakness on Wednesday, primarily due to warnings from Spirit Airlines (SAVE), Frontier Group (ULCC), and American Airlines (AAL) regarding their Q3 outlooks, partially attributed to rising fuel costs. Consequently, the U.S. Global Jets ETF (JETS) dropped by 2.7%. Reviewing Wednesday's economic data, the August CPI showed a 0.6% month-over-month increase, in line with expectations, with rising gasoline prices accounting for over half of the rise. Core CPI, which excludes food and energy, experienced a stronger-than-expected 0.3% month-over-month increase. On a year-over-year basis, total CPI rose by 3.7%, compared to 3.2% in July, while core CPI increased by 4.3%, down from 4.7% in July.

Thursday saw a strong performance in the stock market following a relatively quiet start to the week in terms of market-moving events. All major indices closed with decent gains, and both the S&P 500 and Nasdaq Composite surpassed their 50-day moving averages. Several factors contributed to Thursday's positive bias. There was speculation surrounding the Arm Holdings (ARM) IPO, which opened for trading at $56.10. Additionally, central bank news and economic data supported a more optimistic economic outlook. The European Central Bank (ECB) raised its key interest rates by 25 basis points, hinting that it might have completed its rate hikes, potentially indicating a "dovish hike." The People's Bank of China (PBOC) announced a 25 basis point cut in the required reserve ratio, effective September 15, for banks not currently maintaining a 5% reserve ratio. Furthermore, August retail sales exceeded expectations with a 0.6% increase, and the August Producer Price Index (PPI) reported an in-line core reading and year-over-year increases of 1.6% for total PPI and 2.2% for core PPI. Initial jobless claims for the week ending September 9 were notably low at 220,000, indicative of a tight labor market that supports continued consumer spending. Treasuries exhibited a relatively calm response to the economic data, further bolstering the stock market's performance.

On Friday, the stock market experienced notable declines, coinciding with the quarterly options and futures expiration day. The S&P 500, Nasdaq, and Russell 2000 erased their gains for the week, while the Dow Jones Industrial Average managed only a modest 0.2% weekly gain. All major indices closed near their session lows, with the S&P 500 and Nasdaq slipping below their 50-day moving averages. The decline was widespread, with many stocks participating in the downside moves. However, the influence of mega-cap and growth stocks had an outsized impact on the performance of the indices. Weakness in semiconductor stocks also weighed heavily on index performance, with this weakness following Arm's successful IPO the previous day and a Reuters report indicating that Taiwan Semiconductor Manufacturing Co. (TSM) was delaying chip equipment shipments. Rising market interest rates and oil prices contributed to the negative sentiment. Adobe (ADBE) was among the top laggards after providing underwhelming fiscal Q4 guidance. Notably, General Motors (GM) and Stellantis (STLA) managed to register gains despite failing to reach agreements with the United Auto Workers (UAW), resulting in targeted strikes at three manufacturing plants, one for each of the automakers. Meanwhile, Ford (F) experienced a small decline. In terms of economic data released on Friday, August Import Prices increased by 0.5%, with the prior figure revised to 0.1% from 0.4%. August Import Prices, excluding oil, declined by -0.1%, with the prior number revised to -0.1% from 0.0%. August Export Prices rose by 1.3%, with the prior figure revised to 0.5% from 0.7%. August Export Prices, excluding agriculture, increased by 1.7%. September's Empire State Manufacturing came in at 1.9, surpassing the consensus of -10.0, with the prior figure at -19.0. August Industrial Production rose by 0.4%, surpassing the consensus of 0.2%, with the prior number revised to 0.7% from 1.0%. August Capacity Utilization reached 79.7%, exceeding the consensus of 79.3%, with the prior figure revised to 79.5% from 79.3%. September's University of Michigan Consumer Sentiment, in its preliminary reading, was 67.7, falling short of the consensus of 69.4, with the prior figure at 69.5. The key takeaway from the economic reports is that motor vehicle assemblies weakened ahead of a United Auto Workers (UAW) strike, which is expected to disrupt auto manufacturing capabilities in September. Additionally, consumer inflation expectations decreased, a development the Federal Reserve is likely to view positively, although concerns remain about the impact of rising gas prices on these expectations.

In the latest market data, the Dow Jones Industrial Average closed at 34,619, reflecting a marginal 0.1% increase for the week and a 4.4% gain year-to-date. The NASDAQ ended at 13,708, experiencing a 0.4% decrease for the week but boasting an impressive 31.0% year-to-date growth. The TSX closed at 20,536, marking a 2.3% gain for the week and a 5.9% increase year-to-date. The S&P 500 Index concluded at 4,450, with a slight 0.2% dip for the week, yet it has achieved a solid 15.9% year-to-date growth. The MSCI EAFE* index settled at 2,100, showing a notable 1.2% weekly increase and an 8.0% gain year-to-date. In the bond market, bonds closed at $95.51, reflecting a modest 0.3% decline for the week, but they have gained 0.8% year-to-date. Canada Investment Grade Bonds experienced a marginal 0.2% dip for the week, with a 0.4% year-to-date increase. The 10-year Government of Canada (GoC) Yield stood at 3.73%, representing a 0.1% weekly increase and a 0.4% year-to-date growth. Meanwhile, the 10-year Treasury Yield reached 4.33%, marking a 0.1% weekly rise and a 0.5% year-to-date increase. Oil prices per barrel closed at $91.10, showcasing a substantial 4.1% weekly gain and an impressive 13.5% increase year-to-date. Lastly, the Canadian/USD Exchange rate was at $0.74, with an 0.8% weekly rise and a 0.2% year-to-date growth.