Nasdaq Led Yesterday's Gains, Dow And S&P Make New All-Time Highs Stocks closed mostly higher yesterday led by the Nasdaq with a 0.56% gain, while the Dow and the S&P 500 each made new all-time highs. Yesterday's Case-Shiller Home Price Index showed the 20-City Unadjusted number was flat (0.0% change m/m) vs. last month's 0.6%. On a y/y basis it was up 5.9%, in line with views, and under last month's 6.5% pace. The FHFA House Price Index rose 0.1% m/m vs. last month's upwardly revised 0.0% (from -0.1%), and the consensus for -0.1%. The y/y change was 4.5% vs. last month's upwardly revised 5.3% (from 5.1%). The Richmond Fed Manufacturing Index slipped to -21 vs. last month's -19. And Consumer Confidence dipped to 98.7 vs. last month's upwardly revised 105.6 (from 103.3), and estimates for 103.0. We also heard from Federal Reserve Governor Michelle Bowman yesterday. She apparently was the lone dissenter at last week's Fed meeting where they lowered rates by 50 basis points. She was in favor of a reduction, but only 25 bps, as she still has concerns over inflation, and felt that a 50 bps cut "could be interpreted as a premature declaration of victory" over inflation. We'll get another look at inflation on Friday with the Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. The headline rate is expected to be up 0.1% m/m vs. last month's 0.2% pace, while the y/y rate is expected to tick down to 2.3% vs. last month's 2.5%. The core rate (ex-food & energy) is expected to be up 0.2%, in line with last month. The y/y rate is expected to tick up to 2.7% vs. last month's 2.6%. The consensus at the Fed is that inflation risks have receded, while labor risks have elevated. Friday's PCE will show if that remains the case for inflation. As for the labor market, we'll get the Employment Situation report next Friday (10/4). In other news, the People's Bank of China announced they will cut bank reserve requirements by 50 basis points by year's end. And that they would cut the 7-day repo rate by 0.20 percentage points, and a likely a 0.20-0.25% cut in the loan prime rate. Amid China's slowing economy (although, 2024 GDP is estimated at 4.6%), there have been calls for more stimulus. They have been dragging their feet. But they seem to finally be embracing it with yesterday's larger than expected measures. Chinese and international markets were up on the news. As mentioned yesterday, Congress needs to pass a spending bill (or at least a continuing resolution, i.e., CR) by the end of the month (Monday, 9/30) to avoid a government shutdown. The House and Senate reached an agreement over the weekend. The House will put it up for a vote today. If successful, it'll then go to the Senate. We've got a full slate of economic reports today, which includes MBA Mortgage Applications, New Home Sales, the Survey of Business Uncertainty, and the Treasury Buyback Results. We'll also hear from Federal Reserve Governor Adriana Kugler. And we'll see if the market can keep the rally going. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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