This week, the indexes drifted casually lower until Friday, when strong jobs data caused a shift in expectations around interest rate cuts. Nonfarm payrolls surged, with 254,000 jobs added in September, far surpassing the expected 150,000. As a result, traders now see a 90% chance the Federal Reserve will cut rates by 25 basis points in November, significantly higher than previous forecasts. In other news;
- Powell Speaks On Rate Cut Expectations
- Boeing Considers Stock Sale Amid Strike
- Tesla Deliveries Miss Expectations, Beat YoY
- OpenAI Raises $6.6B
Next week, all eyes will be on crucial inflation data with CPI set to arrive on Thursday and PPI following on Friday. These reports will play a major role in shaping the market’s next move, and with momentum tightening and prices coiling, it could be a powerful one. Let’s dig into the charts and see how things are setting up!
Weekly Analysis
SPY (SPDR S&P 500)
The SPY ETF made little headway this week, briefly dipping below last week’s low before rebounding to close slightly higher at $572.98 (+0.28%). As the price approaches the apex of the rising wedge, the GoNoGo Squeeze indicator shows the oscillator bouncing at the zero line, signaling that momentum has found support and is still in the favor of the bulls.
QQQ (Invesco QQQ Trust)
Similar to SPY, the QQQ ETF made little progress this week but managed to break out of its smaller consolidation flag by Friday, closing at $487.32 (+0.11%). Momentum has been neutral for several sessions, which could indicate that the index is nearing a larger-scale breakout in the days ahead.
IWM (iShares Russell 2000)
The IWM ETF chart looks similar to QQQ, consolidating in a tight flag pattern just above the longer-term symmetrical triangle. Although it closed lower this week at $219.15 (-0.54%), the GoNoGo Squeeze shows a max grid pattern has formed. This means that momentum has been stuck in a non-directional state for quite some time and a directional break is imminent.
Earnings
Notable Results
NKE (Nike)
- EPS: $0.70 vs $0.52 est
- SALES: $11.59B vs $11.65B est
PAYX (Paychex)
- EPS: $1.16 vs $1.14 est
- SALES: $1.32B vs $1.32B est
STZ (Constellation Brands)
- EPS: $4.32 vs $4.08 est
- SALES: $2.92B vs 2.90B est
CCL (Carnival Corp.)
- EPS: $1.27 vs $1.16 est
- SALES: $7.90B vs $7.83B est
MKC (McCormick & Company)
- EPS: $0.83 vs $0.67 est
- SALES: $1.68B vs $1.67B est
RPM (RPM International)
- EPS: $1.84 vs $1.75 est
- SALES: $1.97B vs $2.02B est
CAG (ConAgra Brands)
- EPS: $0.53 vs $0.60 est
- SALES: $2.79B vs $2.84B est
LEVI (Levi Strauss & Co)
- EPS: $0.33 vs $0.31 est
- SALES: $1.52B vs $1.55B est
What’s Happening Now
VIX (CBOE Volatility Index)
Volatility is back on the menu. The VIX has never posted a negative return during an election year in October, with an average increase of 24.68%. Adding to the uncertainty, a U.S. longshoremen strike at key East and Gulf Coast ports caused supply chain disruptions while escalating tensions in the Middle East sent oil prices soaring as the U.S. federal election nears.
LUV (Southwest Airlines)
Southwest Airlines has attracted a fury of insider buying from billionaire board member Rakesh Gangwal, co-founder of IndiGo, India’s largest low-cost carrier. Gangwal is known for his strategic and operational expertise and extensive experience in the aviation industry, including leadership roles at U.S. Airways, United Airlines, and Air France, adding a ton of weight to his $106 million in share purchases.
September’s Nonfarm Payrolls came in at 254K, surpassing the 150K estimate and shifting market expectations toward a 90% chance of a smaller 25bps rate cut in November—up from a 50% chance of a 50bps cut one week ago. 10-year Treasury yields surged toward 4%, reigniting inflation fears, and all of this is happening just as Bitcoin enters a favorable seasonal window of outperformance that could last up to 10 weeks.
Believe it or not, this is just a fraction of what happened in the markets this week. For a full run down delivered straight to your inbox every weekend, sign up for The Official Trendspider Newsletter!
Market Update Into September 7th: Inflation Data Incoming