Stock markets locked in their worst month so far this year as the Federal Reserve dashed hopes for a turnaround in monetary policy, instead confirming its pledge to keep rates higher for longer.
All main stock market indexes are in the red for the week, month, and quarter. The S&P 500 (SPX) lost 4.9% in September and 3.7% in Q3 2023. The Dow Jones Industrial Average (DJIA) declined 3.8% on the month and has lost 2.6% in the quarter. The Nasdaq Composite Index (NDAQ) and the Nasdaq-100 (NDX) were hit the worst, as technology stocks were weighed down by the steep climb of government bond yields. NDAQ is down 5.7% in September and has lost 4.1% in the third quarter; the NDX fell 5.1% and 3.1%, respectively.
Markets are heading into the final months of 2023 concerned that the Fed’s hawkish stance will continue weighing on stocks. Meanwhile, stronger-than-expected data on housing prices, durable goods orders, jobless claims, and consumer inflation expectations, among others, confirmed that the policymakers’ fight against stubborn inflation hasn’t been won yet. On the other hand, reports on weakening consumer confidence, home sales, and August’s PCE inflation suggest continued disinflation in the months ahead.
This ambiguity in the inflation outlook puts additional weight on the economic reports scheduled to be published before the Fed’s next meeting on October 31st. Investors are advised to follow the reported numbers, as they will heavily influence policymakers’ rate decisions.
Here are three economic events that could affect your portfolio this week. For a full listing of all upcoming economic events, check out the TipRanks Economic Calendar.
» September’s ISM Manufacturing PMI – Monday, 10/02 – Released by the Conference Board, this report shows business conditions in the U.S. manufacturing sector. It is a significant indicator of the overall economic conditions. PMIs are considered to be one of the most reliable leading indicators for assessing the state of the U.S. economy, helping analysts and economists to correctly anticipate changing economic trends.
» September’s ISM Services PMI – Wednesday, 10/04 – This report shows business conditions in the U.S. services sector, the largest and most important GDP contributor. The ISM Services PMI is a forward-looking indicator, providing an important insight into the factors that influence GDP growth and inflation. When the business activity index rises, investors may assume that the stock markets will increase because of higher anticipated company earnings.
» September’s Nonfarm Payrolls and Unemployment Rate – Friday, 10/06 – The Nonfarm Payrolls and Unemployment reports, released by the U.S. Bureau of Labor Statistics, present the number of new jobs created during the previous month, and the percentage of people that were actively seeking employment in the previous month. These reports are considered two of the most important economic indicators, as policymakers follow the shift in the number of positions since it is strongly associated with the health of the economy as a whole. One of the mandates of the Federal Reserve is full employment, and it takes labor market changes into account when determining its policy decisions, which influence the capital markets.
