Equity index stayed uncertain and closed flat on Monday.On Wednesday, the US ISM Services PMI is expected to show a still expanding service sector.lost 0.74% last week, which was the fourth week in a row where the index declined. That performance came despite Personal Consumption Expenditures data showing that Core inflation was growing at its slowest pace in two years.
The S&P 500, NASDAQ Composite and Dow Jones Industrial Average all opened lower on Tuesday as US Treasury yields continued to soar. The 30-year Treasury now yields 4.85%, while the 3-month Treasury yields above 5.5%. On Monday, the Institute of Supply Management reported better readings than expected for US manufacturing. The ISM Manufacturing Purchasing Managers Index for September led with a reading of 49, well above the expected 47.7.
With US student loan payments resuming this month, economists predict that lower consumer spending will reduce the service sector economy in the US, but that may take several months to be seen in the data.By far the most significant data release of the week will be the September Nonfarm Payrolls on Friday. Analysts have given a consensusIt would be unsurprising if the August figure is revised lower, however. Both June and July’s data was revised lower after initially much higher readings.
A slowing labor market and reduced inflation should mean less likelihood of further Federal Reserve rate hikes. The CME Group’s FedWatch Tool gives a 74% chance that the central bank will keep rates unchanged at its November 1 meeting. This was at 84% just one week ago, but it was also given a 65% chance one month ago. The S&P 500 is a widely followed stock price index which measures the performance of 500 publicly owned companies, and is seen as a broad measure of the US stock market.
The S&P 500 is absolutely in a downtrend and needs to close above 4,325 before anyone will begin believing that the bottom is in. The index has been trending lower since July 27, and none of the positive data releases have been enough to spur a price rebound. It appears that the Fed’s “higher for longer” narrative has caused many investors to run toward the safety of high-yielding short-term Treasuries.
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