What happened in the markets : 02 September - 06 September 2024
Aries Yuangga, Wakil Penasihat Berjangka
The first week of September 2024 brought a marked shift in investor sentiment, as economic data pointed to a cooling U.S. labor market and increased uncertainty in financial markets. The highly anticipated August nonfarm jobs report confirmed that the labor market is softening, but it fell short of signaling a complete downturn. Meanwhile, markets exhibited a defensive stance, shedding gains after a strong rally earlier in the year. With the Federal Reserve set to meet in mid-September, all eyes are now on how the central bank will react to the changing economic landscape.
Last Week at a Glance
The week started with heightened anticipation for the U.S. labor market data. Early in the week, job openings data revealed a decline to 7.7 million, the lowest level in 2024. Private employment growth, as reported by ADP, came in at 99,000 new jobs—its weakest figure since 2021. The biggest event of the week was Friday's nonfarm payrolls report, which revealed the addition of 142,000 new jobs in August, below the expected 165,000. Revisions to June and July's data showed 86,000 fewer jobs than initially reported, reflecting a weakening trend in the labor market. The manufacturing sector was notably weak, losing 24,000 jobs, while sectors like leisure, hospitality, education, and health services added jobs, albeit at a slower pace than in previous years. Despite these signals of softening, the unemployment rate dipped from 4.3% to 4.2%, suggesting that while job growth is slowing, the labor market is not collapsing. Market reaction was swift. The S&P 500 ended the week down 4.2%, with technology stocks and semiconductors leading the decline. The defensive sectors, including consumer staples and utilities, outperformed as investors sought safety in the face of economic uncertainty. Treasury yields also dropped, with the 10-year yield closing the week at 3.72%, and the yield curve un-inverted, signaling potential Fed rate cuts ahead.
Top movers & shakers🎢
Several individual stocks made headlines with significant price movements driven by a variety of factors, including quarterly earnings reports, analyst ratings, and strategic announcements. Among the notable movers were:
Broadcom (AVGO) 📉: Broadcom's stock dropped by 7% after the company delivered a conservative earnings outlook for the next quarter. Despite meeting expectations for Q3, Broadcom’s cautious guidance sent ripples through the semiconductor sector, leading to broader declines.
Nvidia (NVDA) 💻: Nvidia shares slid by 10% in response to Broadcom's outlook, reflecting concerns over the future demand for chips in key areas like AI and data centers. This marked a significant reversal for the stock, which had been on a strong run earlier in the year.
Advanced Micro Devices (AMD) 🖥️: AMD also saw a sharp decline, with shares down 8.2% for the week. Investor sentiment turned negative as concerns over the semiconductor industry's growth prospects weighed heavily on the stock.
Pulte Group (PHM) 🏠: Pulte Group bucked the broader market trend, rising 3.6% as the homebuilder sector benefited from expectations of future rate cuts. Lower borrowing costs could spur demand for new homes, boosting optimism in the sector.
DR Horton (DHI) 🏡: DR Horton shares climbed by 4.2% as the company similarly benefited from rate cut speculation. Investors believe that an easing interest rate environment could lead to a more favorable outlook for homebuilders.
NextEra Energy (NEE) ⚡: Utilities stocks, including NextEra Energy, performed well as investors sought safety amid market volatility. NextEra saw its stock rise by 2.8%, reflecting the broader rotation into defensive sectors.
The Week Ahead: September 09 - 13, 2024
Looking ahead, the coming week is expected to be less hectic but still filled with significant economic data releases and corporate earnings reports that could influence market direction.
September 11: U.S. Consumer Price Index (August) 📊 – Investors will closely monitor the CPI report, which will offer a critical update on inflation trends. As the last major inflation indicator before the Federal Reserve's meeting, this report could influence the central bank's policy decisions. Analysts expect the headline CPI to continue moving toward the Fed's 2% target.
September 12: U.S. Producer Price Index (August) 💹 – The PPI report will provide further insights into wholesale inflation, reflecting cost pressures faced by producers. This data will help investors understand broader inflationary trends across the economy.
September 13: University of Michigan Consumer Sentiment (Preliminary September) 📈 – The first glimpse into consumer confidence for September will be revealed in this report. It will offer valuable insights into how consumers are feeling about the economy as we head into the fall season.
Key Earnings Reports
The earnings season continues, albeit at a slower pace compared to the previous week. Key companies scheduled to report include:
September 09, 2024:
Oracle (ORCL) 💻: Set to release earnings after the market closes. As a major player in cloud services and enterprise software, Oracle's performance will be closely watched, particularly amid recent volatility in the tech sector. Investors are eager to see the company's outlook for cloud growth.
September 12, 2024:
Adobe (ADBE) 🎨: Adobe will report earnings on Thursday, with expectations focused on its performance in the digital media and creative software markets. Investors will be keen on any updates regarding Adobe's integration of AI into its creative suite, as well as its guidance for the remainder of the fiscal year.
In addition to earnings, Apple (AAPL) 🍎 will host its annual product launch event on Monday, September 9. The tech giant is expected to unveil the iPhone 16, featuring AI-powered enhancements and hardware upgrades. This event could have a significant impact on Apple’s stock and the broader market, as it often sets the tone for consumer electronics trends heading into the holiday season.
Conclusion
The first week of September 2024 highlighted the growing tension in financial markets, with a cooling labor market and signs of economic uncertainty leading to significant sell-offs in key sectors. Defensive stocks, such as utilities and homebuilders, provided a rare bright spot amidst the volatility. As investors brace for the Federal Reserve's upcoming meeting, the focus now shifts to key economic reports and earnings from Oracle, Adobe, and Apple's product launch. With inflation data and consumer sentiment reports on the horizon, this week could offer crucial insights into the Fed's next steps and the market's direction for the rest of the year.
Source:
https://www.schwab.com/learn/story/schwab-market-update
https://www.edwardjones.com/us-en/market-news-insights/stock-market-news/stock-market-weekly-update
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