The S&P 500 hit all-time highs on Thursday, testing the 4,545 mark. By the end of the week, the broad index added 0.6%. The Nasdaq 100 continued to hit its highs on Friday. As a result of the trading session on the last day of the week, the technological index capitalization increased by 0.21% to 15,653 points. The indicator gained 1.6% over the week. Despite a correction in the first half of the month, August was successful for both the S&P 500 and the Nasdaq 100, which rose 3% and 4%, respectively. September is historically considered a weak month for the US market, as it is in this month that the S&P 500 is least likely to reach its historical highs. However, if the broad index at least once in September showed its maximum value, then its dynamics at the end of the month turned out to be positive. Thus, the historical marks reached on Thursday may statistically indicate that this year’s S&P 500 negative seasonality in September can be ignored.
After two successful months, the statistics for August on the US labor market turned out to be significantly worse than the market forecast. The number of jobs in the economy increased by only 235 thousand, at the lowest rate in seven months. Unemployment fell to 5.2% in August, the lowest level since March 2020, down from 5.4% in July. Experts on average expected an increase in the number of jobs in August by 750 thousand and a decrease in unemployment to 5.2%. These weak numbers on new job growth are indicative of the continued weakness of the labor market. At a symposium in Jackson Hall, Powell said that he was among the representatives of the Fed who support the idea of scaling down the $ 120 billion per month asset repurchase program if the economy develops in line with the regulator’s forecast. However, weak statistics on the labor market is a reason for the Fed to think about tightening its policy.
Investors are generally bullish that stocks continue to rally. However, some traders warn that the markets are likely to become more volatile in the fall, including in anticipation of the start of the Federal Reserve’s phasing out of the asset repurchase program. The number of Americans applying for unemployment benefits for the first time fell by 14 thousand last week to 340 thousand. This is the lowest figure since March 2020. The recovery in the labor market has become more resilient against the backdrop of the resumption of business in various sectors of the US economy, despite continuing concerns about an increase in the number of coronavirus infections.
The current week will be short. On Monday, US bourses will be closed due to Labor Day celebrations. In general, an insignificant volume of macroeconomic statistics will be published this week. The most important indicator for the market will be PPI for August, which will be published on Friday. Producer prices correlate with consumer prices, so Friday’s release could proxy the August CPI publication on Tuesday September 14th. For July, US inflation was almost in line with expectations. If the statistics for August do not disappoint the market, then at the next Fed meeting, which will be held on Wednesday, September 22, the regulator may continue its ultra-soft monetary policy, encouraging the markets with soft rhetoric, including regarding the curtailment of the monthly stimulus program.