With economic data on the lighter side this week, it’s no surprise that markets have barely moved. The S&P 500 has yet to break above its August 14th highs and didn’t show much conviction breaking out from the July levels either. We're seeing notable bearish divergence on the RSI, and we continue to remain in the “potential pullback” camp.
We’ve been anticipating a correction for the past three weeks—it hasn’t played out yet, but price action hasn’t advanced much either. September, historically the weakest month of the year for equities, is approaching fast. With valuations sitting in rarified air, that adds further vulnerability to the market.
For now, much of the focus has shifted toward the Federal Reserve and the potential for rate cuts. Take note of the market’s reaction following the Jackson Hole Summit—investors cheered when the Fed acknowledged downside risks to their labor mandate. Personally, I don’t get too optimistic about a weakening labor market. That’s not to say rate cuts wouldn’t benefit the economy or markets down the road, but the context matters.
This week’s data was mostly centered on housing—which arguably remains in a recessionary phase. Canceled contracts in July reached levels seen only six other times, five of which were followed by recessions. I even contributed to that stat—my home sale fell through on day 28 of escrow.
Outside of housing, jobless claims remain low, which is a positive. Hiring is slowing, but layoffs haven’t picked up yet. Consumer confidence, however, came in very weak—particularly regarding labor expectations. One of the leading AI chipmakers posted another strong earnings report, but their data center revenue came in lighter than expected, raising fresh concerns about a potential AI capex bubble.
On Friday, we received the latest PCE inflation numbers. I’ll share a more detailed analysis of that in our Friday update.
📅 Looking Ahead: Key Economic Data Releases
Unlike this week, next week is loaded with economic reports that could move the market:
Tuesday:
ISM Manufacturing – Expected to tick up slightly, but likely to remain in contractionary territory.
Wednesday:
Job Openings (JOLTS) and the Fed’s Beige Book.
Thursday:
ISM Services – Forecasted to rebound modestly but still just clinging to expansion.
Unit Labor Costs – Expected to remain steady at 1.6%.
Productivity – Expected to decelerate to 0.85%.
Initial Jobless Claims – Watch closely for any signs of uptick.
Friday:
Non-Farm Payrolls – Forecasted to accelerate to 100,000. Be sure to watch for potential revisions, which have been moving markets lately.
📺 Join Us Live on Facebook Every Friday
We break down the week’s market moves and preview the week ahead with real-time analysis and commentary. Don’t miss it!
Also, be sure to register for our upcoming Social Security Webinar on September 24th—spaces are limited!https://streamyard.com/watch/qtdDmna7z4tx
— HPK Provident Advisors
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts may not develop as predicted.