Thursday was a day of surprises in the market as jobless claims took center stage over the CPI report. The unexpected rise in initial claims by 258k and continuing claims by 42k was attributed to the impact of Hurricane Helene and reduced shifts at auto giant Stellantis. This soft data is expected to lead to messy economic data in the coming months, especially with Hurricane Milton’s impact yet to be seen.
On the other hand, September’s CPI figures showed a slight increase, with headline CPI rising by 2.4% YoY and core CPI ticking up to 3.3% YoY. Despite this, the data is not expected to deter the FOMC’s confidence in inflation returning to the 2% target over the medium-term. It is anticipated that the FOMC will continue with 25bp cuts at each remaining meeting this year and into 2025 until the fed funds rate reaches around 3% next summer.
Atlanta Fed President Bostic’s remarks about potentially skipping the November meeting caused some market jitters, but context is important as his views have changed in the past. In terms of market performance, the S&P 500 and Nasdaq 100 rebounded from initial declines, while crude oil prices rose due to geopolitical tensions.
Looking ahead, there is a busy end to the week with the UK GDP figures, US PPI report, consumer sentiment data, and Canadian labor market report all on the docket. Additionally, the start of the third-quarter earnings season kicks off with JPMorgan and Wells Fargo reporting. Overall, S&P 500 earnings growth is expected to be at 4.6% YoY in Q3, continuing the trend of consecutive quarterly increases.
As market participants brace for potential gapping risks over the weekend and upcoming events, such as the Chinese finance minister’s press conference and the Columbus Day holiday in the US, there is anticipation for continued volatility and uncertainty in the markets. The impact of these events on global economic outlook remains to be seen, but investors are advised to stay vigilant and informed as they navigate through the changing market landscape.
