S&P 500 NEWS

• S&P 500 made first weekly gain of August after three straight weekly declines.
• China halves stamp duty on stock trading, sending market higher.
• Inflation data favored by the Fed arrives on Thursday.
• US Nonfarm Payrolls data will be released on Friday.
• Salesforce, CrowdStrike, Broadcom and LuluLemon Athletica release earnings this week.

The S&P 500 opened higher on Monday to start the week as investors look forward to a week of economic data prints and earnings while they put the Jackson Hole speech from Federal Reserve Chair Jerome Powell behind them. In an attempt to backstop their equity markets, the Chinese central government has cut in half the stamp duty required for stock trading on the mainland. Chinese stocks traded in the US have all swung higher on the news.

Equities initially went south on Friday during Powell’s speech, but the S&P 500 closed up 0.67% on the day and 0.82% on the week. This week traders will see if they can capitalize on last week’s end to August’s severe sell-off. The index lost 2.27%, 0.31% and 2.11% in the first three weeks of August, respectively.

The market is mostly waiting on Thursday’s Personal Consumption Expenditures data for July and Friday’s Nonfarm Payrolls report for August. Both will have major ramifications for the index as lower inflation and new hiring would please the market in that it would make it less likely 

The S&P 500 opened the week up 0.5% in conjunction with the Dow Jones Industrial Average, while the NASDAQ Composite gained 0.75% initially.

S&P 500 News: PCE, Nonfarm Payrolls ring in September

It is uncanny that the market is advancing on Monday morning now that expectations for another rate rise in November have now taken the majority. Belief in a higher terminal rate should have a negative effect on the index, since it would increase the cost of capital and reduce valuation multiples.

CME Group’s FedWatch Tool tells us there is now a 57% chance that the Fed will raise rates at the November meeting despite the figure being 33% just a month ago. although the market still largely thinks the September meeting will witness a pause. This splits off into a 48% chance that the central bank will hike by 25 basis points and a 9% chance of a 50 basis point hike.

In comes the Nonfarm Payrolls data for August and the Personal Consumption Expenditures (PCE) data for July to provide the market with more insight into the Fed’s thinking. Last Friday, Powell reiterated that he was still open to more rate hikes but that the central bank under his leadership had already shown broad success. 

On Thursday, the US Bureau of Economic Analysis will unveil its PCE reading for July. This is the Fed’s preferred gauge of inflation, so it has more predictive power for the market. Wall Street expects 0.2% core growth in the price index compared with June and 4.2% on an annualized basis. That annual figure is slightly higher than June’s 4.1%.