Wall Street closed out the final week of the third quarter lower as Friday’s initial rally on tame inflation data ended largely in losses. The Dow , S & P 500 and the Nasdaq all fell sharply for the historically tough month of September and for the quarter. In fact, the third-quarter declines for the Dow and S & P 500 broke three straight quarters of gains. The Nasdaq’s retreat came after advances in previous two quarters. While all three stock benchmarks are way up year to date, investors are hoping the rest of the year lives up to its reputation as the best-performing quarter. The big wild card is the Federal Reserve. Will it or won’t it raise interest rates one last time in 2023? Will rates remain higher for longer next year? At last week’s meeting, the Fed paused its rate hikes and signaled one more increase this year and fewer than previously indicated cuts in 2024. Friday’s softer monthly reading of the core personal consumption expenditures (PCE) price index — the Fed’s preferred inflation gauge — was a step in the right direction for those of us who believe the central bank has done enough with the 11 rate hikes since March 2022. Growth in core PCE, which excludes energy and food prices, was below 4% for the first time since June 2021. While still above the Fed’s 2% inflation target, the smaller core PCE increase marked a continuation of the downward trend since September 2022. We hope it convinces the Fed to hold off on any additional hikes as we await the impact of prior rate moves. There is always a lag between monetary policy changes and their effects on the actual economy. However, high rates and the sharp rebound in energy prices do remain major headwinds for equity prices as fourth-quarter trading begins Monday. Major economic reports, earnings from one of our 35 Club holdings, and the fallout from the auto strike and a possible government shutdown are three things we’re watching closely in the week ahead. Key economic data : It’s all about jobs data. Of the three releases next week, the nonfarm payroll report on Friday carries the most weight by far as it provides the most detailed breakdown of the labor market. In addition to the headline number, investors will focus on the unemployment rate and wage inflation. This brings us no joy to say, but what Wall Street wants to see is more pain on Main Street. The thinking: If unemployment ticks up and wage gains slow, inflation will fall since there will be fewer dollars chasing goods and services. That, in turn, will help keep the Fed on pause as we await the impact of prior hikes. Also important to market will be the ISM reports and factory orders, which provide insight on manufacturing (about 12% of U.S. GDP). Manufacturing has been contracting for the last 10 months. That trend is not expected to change with September report but investors are looking for the rate of contraction to slow. Club earnings : Constellation Brands (STZ) reported better-than-expected earnings for the second quarter, but investors took issue with management simply reiterating its outlook, rather than raising it on the back of strong results. Management did say that while beer depletions — an industry term for the number of cases that are sold to retailers by a distributor — were a bit short versus expectations, performance accelerated through the quarter and through June. We’d like to see that trend continuing. On the wide side of the portfolio, management guided for margin expansion through the year, so we’ll expect proof of it in the report. Strike and shutdown fallout: We explained what a government shutdown could mean for the stock market. As for the UAW strike against the Big 3 Detroit automakers, the union announced on Friday that it is expanding strikes against General Motors (GM) and Ford Motor (F), while sparing Chrysler-parent Stellantis (STLA) because of progress made in its talks. This strike is something all investors should watch, even if they don’t own a car stock. The outcome could show a shift in the power dynamic between companies and their workforces, with lasting consequences for wages, corporate margins and automation efforts. Here’s the full rundown of all the important domestic data in the week ahead as we continue to assess whether we’re going to put more money to work in an oversold market. We bought more shares of five Club stocks in sectors from tech to consumer staples to industrials. Monday, Oct. 2 10 a.m. ET: ISM Manufacturing PMI Tuesday, Oct. 3 10 a.m. ET: JOLTS Job Openings Before the bell earnings: McCormick & Co (MKC) After the bell: Cal-Maine Foods (CALM) Wednesday, Oct. 4 8:15 p.m. ET: ADP Employment Survey 10:00 a.m. ET: Factory Orders 10:00 a.m. ET: ISM Services PMI Before the bell: Acuity Brands (AYI), RPM International (RPM), Tilray (TLRY), Helen of Troy (HELE) After the bell: Accolade (ACCD) Thursday, Oct. 5 8:30 a.m. ET: Initial jobless claims Before the bell: Constellation Brands , Conagra Brands (CAG), Lamb Weston (LW) After the bell: Levi Strauss (LEVI) Friday, Oct. 6 8:30 a.m. ET: Nonfarm Payrolls (Jim Cramer’s Charitable Trust is long STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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Wall Street closed out the final week of the third quarter lower as Friday’s initial rally on tame inflation data ended largely in losses. The Dow, S&P 500 and the Nasdaq all fell sharply for the historically tough month of September and for the quarter. In fact, the third-quarter declines for the Dow and S&P 500 broke three straight quarters of gains. The Nasdaq’s retreat came after advances in previous two quarters. While all three stock benchmarks are way up year to date, investors are hoping the rest of the year lives up to its reputation as the best-performing quarter.
