Ah, Wall Street! The land of bulls, bears, and everything in between. This week was nothing short of a rollercoaster ride. The Dow Jones Industrial Average eked out a modest gain, finishing the week 0.1% higher. Conversely, the S&P 500 and Nasdaq weren’t so lucky, recording 0.2% and 0.4% declines, respectively.

But wait, there’s more! Both the S&P 500 and Nasdaq closed below their 50-day moving averages. For the uninitiated, that’s often a red flag signaling potential bearishness ahead. Will the Fed come to help? So, buckle up!

Sector Spotlight: The Good, the Bad, and the Ugly

Information Technology: A Heavyweight Takes a Hit

Let’s talk about the elephant in the room: Information Technology. This sector is the most heavily weighted in the S&P 500, and boy, did it take a nosedive this week, declining by a whopping 2.2%.

Apple and Adobe: The Downward Duo

Apple (AAPL), the tech titan, saw its stock drop by 1.8%. Why, you ask? Well, it’s facing scrutiny in China and had a product event introducing the iPhone 15. But apparently, the market wasn’t impressed. Then there’s Adobe (ADBE), which tumbled 5.6% following its underwhelming fiscal Q4 guidance. Talk about a double whammy!

Semiconductors: Not So Chipper

Semiconductors also had a rough week. The PHLX Semiconductor Index fell by 2.5%, following news of Arm’s (ARM) successful IPO and a Reuters report that Taiwan Semiconductor Manufacturing Co. (TSM) is delaying chip equipment shipments. Yikes!

Corporate Drama: Airlines and Auto Workers

Airlines: Turbulence Ahead

Several airlines, including Spirit Airlines (SAVE), Frontier Group (ULCC), Delta Air Lines (DAL), and American Airlines (AAL), sent out warning signals about their Q3 outlooks. The culprit? Rising fuel costs. So, if you’re invested in airlines, fasten your seatbelts; it’s going to be a bumpy ride.

Auto Industry: Strikes and Gains

In a surprising twist, the United Auto Workers launched targeted strikes at manufacturing plants affecting Ford (F), Stellantis (STLA), and General Motors (GM). Despite this, these companies still managed to close the week with gains. Ford was up 2.5%, Stellantis soared 5.6%, and GM revved up 3.0%. Go figure!

Economic Indicators: Inflation and More

The CPI Conundrum

The August Consumer Price Index (CPI) was up a robust 0.6%, and core CPI, which excludes food and energy, was up 0.3%. For those scratching their heads, core-CPI is what the Fed closely monitors. And guess what? It’s still well above the Fed’s 2.0% target. So, the Fed will likely maintain a “higher for longer” mindset regarding interest rates.

Bond Yields and Oil Prices

The bond market seemed to take the inflation data in stride. The 2-yr note yield rose seven basis points to 5.04%, and the 10-yr note yield also rose seven basis points to 4.33%. No panic there! Meanwhile, WTI crude oil futures jumped 4.2% to $91.00/bbl. So, if you’re feeling the pinch at the pump, you’re not alone.

What’s Next? The Fed’s Upcoming Meeting

All eyes are on the Federal Reserve’s meeting next week. While a rate hike isn’t expected, market participants are keen to hear about the updated Summary of Economic Projections and Fed Chair Powell’s tone at his press conference.

Wrapping It Up

So, there you have it—a week full of ups and downs, twists and turns, and a whole lot of drama. Whether you’re a bull, a bear, or just a curious spectator, one thing’s for sure: Wall Street never fails to keep us on the edge of our seats. Until next week, keep your eyes peeled and your portfolios diversified!

CALENDAR & MOVERS

• Wednesday: Fed Interest Rate Decision
• Thursday: Existing Home Sales (August)
• Housing Market
• Strikes?

This week, the spotlight is glaringly fixed on the Federal Reserve’s policy-setting meeting, the housing market, and a smattering of international intrigue with the Bank of England. So, buckle up, folks! We’re in for a rollercoaster of a week.

The Fed’s Poker Face: To Hike or Not to Hike?

Investors are on the edge of their seats; eyes peeled on Federal Reserve Chair Jerome Powell and his merry band of policymakers. The big question on everyone’s mind: will they or won’t they hike interest rates? The Fed has been playing a game of “red light, green light” with rate hikes—pausing in June, then nudging it up by 25 basis points in July.

But wait, there’s a twist! Despite the anticipated pause, inflation is rearing its ugly head again, stoked by—you guessed it—skyrocketing energy costs. Analysts are betting their bottom dollar that we’ll see another rate hike before the year wraps up. The Fed’s data-driven approach, coupled with a modest dip in labor market strength and core inflation, suggests they’re not throwing caution to the wind anytime soon. So, will Powell drop any breadcrumbs about future rate policy? Your guess is as good as mine.

Housing Market: The Balancing Act

What’s Cooking?

• Building Permits
• Housing Starts
• Existing Home Sales for August
• NAHB Housing Market Index for September

Ah, the housing market is where the American Dream flourishes or flounders. This week, we expect a smorgasbord of updates that could make or break this precarious balance. Despite mortgage demand taking a nosedive thanks to higher interest rates, the housing market isn’t crashing and burning just yet. Why? Well, it’s simple: there aren’t enough homes to go around! This scarcity is acting like a safety net, preventing home prices from plummeting into the abyss.

If the housing market continues its slow and steady decline, the Fed will likely breathe a sigh of relief. It would bolster their belief that core inflation is on a leash, making it easier for them to maintain their restrictive stance without causing a hullabaloo.

Across the Pond: The Bank of England’s Tightrope Walk

The U.K. isn’t just about tea and crumpets; they’ve got their own financial drama brewing. This week, they’re releasing August inflation data, and all signs point to a minor uptick to 7.1%. Hold onto your hats, because on Thursday, the Bank of England is expected to raise interest rates by 25 basis points to 5.5%, the highest since the financial crisis of 2008. That would mark their 15th consecutive rate hike since they started tightening the purse strings in December 2021. Talk about commitment!

A Pinch of This, A Dash of That

• United Auto Workers Strike: Keep an eye on carmakers Stellantis (STLA), Ford (F), and GM (GM). The strike that kicked off last Friday is already throwing a wrench in the works, disrupting supply chains and production like nobody’s business.
• Earnings Reports: FedEx (FDX) and General Mills (GIS) are stepping into the earnings confessional. Will they deliver or disappoint? Time will tell.
• Economic Updates: Last but not least, the economic calendar is serving up some fresh composite PMI data from S&P and HCOB on Friday, giving us a snapshot of the U.S. and European economies.

So there you have it—a week chock full of financial twists and turns. Whether you’re a Wall Street wolf or a casual observer, keep your eyes peeled and your ears to the ground. The next few days could be a game-changer.

BONDS

Investors eagerly await the Federal Reserve’s upcoming policy meeting, expecting a halt in interest rate hikes. The 10-year note yield is up by one basis point to 4.34%, the 30-year bond yield remains at 4.42%, and the two-year note yield has increased by two basis points to 5.05%.

Inflation Reports: Last Friday’s inflation data met expectations, causing a slight increase in various bond yields. The 10-year note rose four basis points to 4.33%, the 30-year bond rose three basis points to 4.42%, and the two-year note increased two basis points to 5.03%.

Housing Market: The National Association of Home Builders Market Index is expected to drop slightly to 49 in September, down from 50 in August.

Treasury Auctions: The U.S. Treasury plans to issue $69 billion in 13-week and $62 billion in 26-week bills.

Mortgage Rates: The average 30-year mortgage rate increased to 7.18%, while the 15-year rate slightly decreased to 6.51%.

Municipal Bonds: According to Bloomberg, the 30-day visible supply of municipal bonds rose to $8.129 billion, below the 12-month average of $8.176 billion.

COMMODITIES

Oil & Energy

Oil prices are on an uphill climb, grappling with global supply bottlenecks. The International Energy Agency’s freshest insights underscore the looming threat of a market squeeze due to dwindling global stockpiles. OPEC chimes in with its own forecast, projecting a gaping hole of about 3.3 million barrels per day in the supply-demand equation by year’s end. The upshot? Brent Crude is hovering near the $93 mark, and WTI is hot on its heels, closing in on $90. That’s a staggering 30% leap in a mere four months.

Switching gears to natural gas, the scene is less rosy. Labor disputes down under in Australia are putting a dent in 5% of the world’s LNG production. Over in Europe, Norway’s maintenance activities are adding fuel to the already inflamed natural gas prices, currently pegged at around EUR 38/MWh on the Dutch TTF.

Gold & Precious Metals

Often seen as the economic barometer, Copper is riding high this week, buoyed by encouraging numbers out of China. This uptick has eclipsed the swelling LME inventories, pushing copper prices to a ballpark figure of $8400 per metric ton.

In the expansive realm of ferrous metals, the trend is your friend, pointing upwards over the last week. Gold, the eternal safe haven, ended the week with a flourish despite the resurgence in bond yields. While central banks might be hiking rates for now, the high-interest rate environment is here to stay, casting a shadow over gold’s allure as a non-yielding asset. As of now, you’d need about $1925 to take home an ounce of the shiny metal.

CRYPTOCURRENCY

After a month-long slump, Bitcoin is back in the limelight, surging over 2% since the start of the week to trade around a tantalizing $26,400. On the flip side, Ether isn’t enjoying the same kind of rally, eking out a meager gain of just 0.27% and hovering in the $1,620 ballpark. What’s more, trading volumes on big-name exchanges like Coinbase and Binance have steadily declined, signaling a cooling enthusiasm among crypto investors. Without positive momentum, digital currencies might struggle to climb back to their former glory.