It was a rough start to the historically weak month of September on Wall Street. Economic growth concerns and investor trepidation ahead of Tuesday’s presidential debate and the Federal Reserve’s policy meeting later in the month sank the market. For the week: The S & P 500 gave back over 4% in its worst weekly performance in a year; the Nasdaq plunged more than 5.5%; and the Dow Jones Industrial Average dropped roughly 3%. The sharp selling Friday was partly due to Club name Broadcom ‘s 10% post-earnings stock decline. The chipmaker beat on the quarter but disappointed with guidance , and shares were slammed. It’s a familiar occurrence this earnings season. We thought Broadcom stock was unfairly punished and saw Friday’s weakness as a buying opportunity. Friday’s trading was also complicated by the government’s release of softer monthly job data . August nonfarm payrolls grew by 142,000, well short of expectations of 161,000. The unemployment rate ticked down, as expected, to 4.2%. while wages ticked up slightly more than expected to 3.8% year over year. The employment report sparked worries that the expected soft landing might be in jeopardy. We don’t think so, and Jim Cramer on Friday questioned why big tech stocks, which are not that correlated to the economy, are taking the brunt of the selling. He also said that, unfortunately, the only way to justify the Fed cutting interest rates is to get weak numbers like the nonfarm payrolls reading. The market sees 125 basis points, or 1.25 percentage points, of Fed rate cuts across the year’s three remaining policy meetings, according to the CME FedWatch tool , starting with a 25-basis-point reduction at their Sept. 17-18 gathering. The Fed also meets Oct. 31-Nov. 1 and Dec. 12-13. In the week ahead, investors get two reads on inflation that could sway the Fed, a few stragglers on the earnings front, and a chance to see Democrat Kamala Harris and Republican Donald Trump debate in the lead-up to November’s presidential election. Inflation, inflation : The August consumer price index (CPI) is out Wednesday, and the August producer price index (PPI) is out Thursday. CPI carries more weight because it measures the prices that consumers are paying at the point of sale, which is what the Fed is concerned with most when thinking about interest rate policy. Economists, according to FactSet, are looking for a 2.6% year-over-year increase for headline CPI and a 3.2% year-over-year increase at the core level, which strips out food and energy prices due to their inherent volatility. In addition to the headline and core readings, we are still keeping a close watch on the shelter component. How much Americans pay for housing is a big part of the overall index and the most problematic area for the Fed. That’s because shelter has proven much more sticky than other areas of price inflation. It also remains at a much higher level than the other components of the index. Economists are expecting a year-over-year increase of 1.7% on headline PPI and a 2.4% advance in the core rate. PPI tracks the prices producers pay, also referred to as input costs. While the Fed is more concerned about consumer prices, the PPI is still a crucial report to monitor because input costs dictate selling prices as companies look to protect profit margins. We certainly don’t want to see anything too hot that will spark fears that either corporate profit margins are being squeezed, or that price hikes are coming. Inflation-weary shoppers have only just started to see prices moderate and would be hard-pressed to absorb another round of increases. Consumer resilience is the key to avoiding a recession given two-thirds of the nation’s economy is driven by private consumption. Earnings : No Club stocks are set to report, however, outside the Club, there are two big tech companies and two consumer-related names releasing their results this week After Monday’s close, we get Oracle , which will provide yet another look into the state of data center spending and demand for AI infrastructure. On Thursday morning, we hear from Signet Jewelers , providing a look into the state of consumer discretionary spending. Kroger also reports earnings, which will give us an idea as to the state of food costs. After Thursday’s close, Adobe is out with results, and we’ll be hoping to glean some valuable information in terms of consumer and enterprise demand for generative AI offerings. The debate : Vice President Harris and former President Trump are set to face off Tuesday at the National Constitution Center in Philadelphia. The debate, hosted by ABC News, gives Americans their first chance to see the two candidates square off. The first presidential debate was between President Joe Biden and Trump before Biden dropped out of the race. Pillars of Trump and Harris’ economic plans are starting to emerge from capital gains taxes to corporate tax rates. According to the latest RealClear Politics polling average, Harris has a small lead over Trump. Week ahead Monday, Sept. 9 After the bell earnings: Oracle (ORCL) Tuesday, Sept. 10 After the bell: GameStop (GME), Dave & Buster’s (PLAY), Petco (WOOF) Presidential debate Wednesday, Sept. 11 8:30 a.m. ET: Consumer price index Before the bell: Manchester United (MANU), Designer Brands (DBI) Thursday, Sept. 12 8:30 a.m. ET: Producer price index 8:30 a.m. ET: Initial jobless claims Before the bell: Signet Jewelers (SIG), Kroger (KR) (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) 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.
Traders work on the floor of the New York Stock Exchange during afternoon trading on September 05, 2024 in New York City.
Michael M. Santiago | Getty Images
It was a rough start to the historically weak month of September on Wall Street. Economic growth concerns and investor trepidation ahead of Tuesday’s presidential debate and the Federal Reserve’s policy meeting later in the month sank the market.
