Overview:
On Friday, September 27, 2024, the U.S. stock market ended with mixed results, driven by a tame inflation report that raised expectations for further Federal Reserve rate cuts. The Dow Jones Industrial Average closed at a record high, up 0.33%, gaining 137.89 points to end at 42,313.00. The S&P 500 slipped slightly by 0.13%, closing at 5,738.17, while the Nasdaq Composite dropped 0.39% to settle at 18,119.59. The Russell 2000 index, which tracks small-cap stocks, rose 0.67%, reaching a one-week high as small-cap stocks are expected to perform better in a low-interest-rate environment.
Investors remain focused on the Federal Reserve’s monetary policy outlook, as inflationary pressures appear to be easing. The University of Michigan’s consumer sentiment index came in at 70.1, beating economists’ expectations of 69.3, providing further optimism for the market.
Fear & Greed Index:
Cautious Optimism – Investors remain optimistic that the Federal Reserve will cut rates further, but there is still some caution as labor market reports are expected next week.
Key Indices (Closed Prices):
- Dow Jones Industrial Average: +0.33% at 42,313.00 (Record high)
- S&P 500: -0.13% at 5,738.17
- Nasdaq Composite: -0.39% at 18,119.59
- Russell 2000: +0.67% at a one-week high
Sector Performance:
- Winners:
- Materials: The sector rose as mining stocks benefited from China’s central bank liquidity injection. Arcadium gained 2.13% and BHP added 1.81%.
- Healthcare: Bristol-Myers Squibb climbed 1.58% after the FDA approved its new schizophrenia drug.
- Losers:
- Technology: The sector underperformed, with Nvidia falling 2.17%, dragging down the Nasdaq.
- Retail: Costco Wholesale dropped 1.76% after posting disappointing fourth-quarter revenue.
Key Movers:
- Nvidia (NVDA): Declined 2.17%, continuing its recent slide, despite robust demand for AI chips.
- Bristol-Myers Squibb (BMY): Gained 1.58% following FDA approval of its new drug, boosting the healthcare sector.
- Alibaba (BABA): Rose 2.15%, benefiting from China’s liquidity boost.
- PDD Holdings (PDD): Gained 4.67% as optimism grew about Chinese economic recovery following new policy measures.
Economic Data:
- Consumer Sentiment: The University of Michigan’s final September reading on consumer sentiment came in at 70.1, surpassing expectations of 69.3, indicating improving consumer confidence.
- Inflation: A tame inflation report continued to support the case for additional rate cuts from the Federal Reserve. Investors are now pricing in a 52.1% chance of a 50 basis point rate cut at the Fed’s next meeting.
- Commodities: Mining stocks and commodity prices rose as China’s central bank injected liquidity into the economy and lowered interest rates.
Outlook:
With inflation appearing to ease, the market is increasingly optimistic about further interest rate cuts by the Federal Reserve. Investors are now shifting their focus to key labor market data expected next week, which will play a crucial role in shaping the Fed’s upcoming policy decisions. Small-cap stocks are expected to continue benefiting from a low-rate environment, while technology stocks may face further volatility.
