The past five trading days featured several developments that created a bit of volatility, though the major indexes all managed weekly gains. The first major news item came out on Wednesday when the FOMC meeting minutes for September were made public. Perhaps the biggest takeaway was that there were a range of opinions as to how aggressive the Fed should have been in cutting rates.
While all agreed that a rate cut was appropriate, not everyone was on board with a 50-point cut behind the scenes. Publicly, only one official dissented and said that a 25-point cut was the best course of action. This provided some fuel that there might be either a pause in November or shallower rate cuts than what the market predicted would occur just last week.
On Thursday, inflation data was released and came in slightly higher than expected on both a monthly and yearly basis. Core CPI was up .3 percent on a monthly basis compared to an expected increase of .2 percent, while overall CPI was up .2 percent on a monthly basis compared to an expected increase of .1 percent. Annual inflation came in at 2.4 percent, which was slightly higher than the projected 2.3 percent.
Market analysts believe that this further makes a case against cutting rates by more than 25 basis points in November or December. However, it is also important to mention that jobless claims came in on Thursday at 258,000 for the previous seven days. There is some speculation that Helene and Milton were responsible for the uptick because of the damage and general disruption those storms caused.
On Friday, the Price Producers Index (PPI) was made public. It found that Core PPI came in at .2 percent, which was exactly what the market thought it would be. It also found that the overall PPI was unchanged, which was lower than the expected increase of .2 percent. This may imply that inflation could remain steady or perhaps continue to drift lower in the coming months.
Also on Friday, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment came in at 68.9, which was lower than the expected 70.9 and lower than last month’s adjusted reading of 70.1. Inflation expectations have crept up to 2.9 percent from 2.7 percent last month. Ultimately, the two reports mean that consumers are souring on the economy and that it’s likely at least in part because of a belief that inflation won’t be reined in.
The S&P 500 finished the week up 1.1 percent to close at 5,815, which was an increase of roughly 90 points over the past five trading days. The weekly low of 5,694 occurred late on Monday afternoon while the market closed near the high of the week.
The Dow finished the week up 1.2 percent to close at 42,863. Like the S&P, the Dow made its low of the week on Monday dipping to 41,859 while closing the week at its highest point.
Finally, the Nasdaq finished up 1.1 percent this week to close at 18,342. As with the other indexes, it made its low of the week on Monday, spent the rest of the week moving higher.
In international news, Great Britain announced on Friday morning that its gross domestic product (GDP) grew by .2 percent over the past month. Canada announced on Friday that the economy there added 46,000 jobs and the unemployment rate dropped to 6.5 percent. On Tuesday morning, New Zealand announced that its key interest rate was being reduced by 50 basis points to 4.75 percent.
The upcoming week will see retail sales data released in the United States on Thursday. Meanwhile, Great Britain will announce inflation and retail sales figures next week while the Eurozone will make its next monetary policy decision on Thursday morning.