What happened in the markets : 23 September - 27 September 2024

30 Sept

Aries Yuangga, Wakil Penasihat Berjangka

The markets continued their positive streak last week, buoyed by favorable economic data and declining inflationary pressures. The optimism was driven by the Federal Reserve's easing policies and broader economic resilience, even as political uncertainties loom ahead of the U.S. presidential election. Despite some softness in tech stocks, the Dow Jones Industrial Average hit new record highs, maintaining the momentum from earlier in the month. With October fast approaching, market participants brace for potential volatility, especially with key economic data releases just around the corner.

Last Week at a Glance

For the week ending September 27, 2024, the major U.S. stock indexes extended their winning streak. The Dow Jones Industrial Average rose by 0.6% to close at 42,313, hitting a record high. The S&P 500 gained 0.6%, closing at 5,738, while the Nasdaq Composite advanced by 1.0% to 18,120. The positive performance was underpinned by solid economic data, declining inflation, and the continued anticipation of lower interest rates. Key data released last week further strengthened investor sentiment. The August Personal Consumption Expenditures (PCE) price index report showed a modest 0.1% rise in both headline and core readings, confirming that inflation is continuing to cool. The annual PCE inflation rate of 2.2% was below consensus estimates, giving investors hope that the Federal Reserve will keep cutting rates. Energy prices, however, experienced a setback, with oil dropping 3.5% to $68.54 per barrel, reflecting the broader trend of softer demand and supply chain adjustments. Treasury yields remained flat, with the 10-year yield ending the week at 3.76%, while the Cboe Volatility Index (VIX) jumped to 16.64, signaling some cautious market sentiment ahead of the upcoming election.

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:

Wynn Resorts (WYNN) 🎰: Wynn Resorts surged 7.24% following an upgrade from Morgan Stanley, which raised its rating to "overweight" from "equal weight." The upgrade cited attractive valuations and underappreciated growth potential in the United Arab Emirates, fueling investor enthusiasm.
Nvidia (NVDA) 🖥️: Nvidia tumbled 2.17% after reports that the Chinese government is encouraging local companies to avoid products made by the chip giant. This raised concerns about future revenue from one of Nvidia's key markets, resulting in a notable pullback.
Eli Lilly (LLY) 💊: Eli Lilly declined by 3.53%, driven by technical selling pressure after the stock fell below its 50-day moving average. Despite strong fundamentals, the stock’s technical setup triggered a wave of selling.

Despite these individual moves, the broader market displayed resilience, with over 79% of S&P 500 stocks trading above their 200-day moving averages—a signal of underlying market strength even in the face of stock-specific challenges.

The Week Ahead: September 30 - October 04, 2024

Looking ahead, the upcoming week will feature critical economic data releases and central bank meetings that could significantly influence market movements.

Tuesday, October 1: The September ISM Manufacturing PMI will be released. With the previous month’s reading at 47.2%, markets will be watching closely for signs of stabilization in the manufacturing sector, which has been in contraction for several months.
Tuesday, October 1: The August Job Openings and Labor Turnover Survey (JOLTS) will provide insight into the U.S. labor market, with a focus on job vacancies and turnover rates.
Wednesday, October 2: The ADP employment report for September will give an early indication of private-sector job growth ahead of the official nonfarm payrolls data later in the week.
Friday, October 4: The highly anticipated September nonfarm payrolls report will be released. Analysts expect a modest increase of around 130,000 jobs, down from 142,000 in August. A weak report could strengthen expectations for additional Federal Reserve rate cuts by year-end.
Geopolitical risks: A potential dock worker strike on the East and Gulf Coasts could disrupt supply chains and inflation. The deadline for negotiations is set for Monday, September 30. Any disruption could have broad market impacts, particularly in trade-sensitive sectors.

Key Earnings Reports

The upcoming earnings season is expected to provide critical insights into how corporations are navigating the current economic environment. Here’s a preview of notable sectors and companies:

Semiconductor Sector: Companies like Nvidia (NVDA) 🖥️ will be closely monitored as geopolitical tensions with China pose potential risks. Nvidia’s earnings could be under pressure given its heavy reliance on the Chinese market, which is facing increasing restrictions.
Consumer Sectors: On the flip side, consumer-facing industries, particularly retail and travel, are poised for stronger earnings due to cooling inflation and a stable job market. Companies in these sectors may report robust results as consumer spending remains resilient.
Technology and Growth Stocks: Tech stocks, particularly in the semiconductor space, are expected to face some headwinds. However, continued demand for AI and cloud computing services may still offer growth potential for firms like Nvidia despite short-term challenges.

The earnings season will be pivotal for shaping market sentiment and providing a clearer picture of corporate health across these diverse industries.

Conclusion

Last week, markets continued their upward momentum, driven by favorable economic data and easing inflation, despite ongoing political uncertainties. Major indexes, including the Dow, S&P 500, and Nasdaq, posted gains as investors remained optimistic about the Federal Reserve's easing policies. However, individual stocks like Wynn Resorts surged on analyst upgrades, while Nvidia and Eli Lilly faced headwinds. With critical data releases and geopolitical risks looming in the week ahead, including the ISM Manufacturing PMI and nonfarm payrolls report, investors are bracing for potential volatility. Earnings season will also provide key insights, especially for tech and consumer-facing sectors.

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

*Disclaimer:

This information is provided for general information purposes only. Consider your investment objectives, financial resources and other relevant circumstances carefully before investing. This is not an invitation or an offer to invest, nor is it financial advice or a recommendation to buy or sell any investment.

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