The Dow Jones and S&P 500 hit record highs last week, driven by two key economic events – the revised GDP report showing 3% growth and the August PCE report showing inflation dropping to 2.2%. Despite the positive economic data, the Russell 2000 finished slightly lower. The momentum in large-cap indexes continued for the third straight week, with the Dow Jones and S&P 500 reaching all-time highs. The Nasdaq Composite had the best week, up 1%, while the Russell 2000 was down 0.1%. Attention now turns to the nonfarm payrolls report this week on Friday.
The Dow Jones closed at a record high of 42,313 last week, up 0.6% for the week, while the S&P 500 hit a record closing high of 5,745 before finishing the week at 5,738, also up 0.6%. The Nasdaq Composite gained 1% to 18,119, marking the third consecutive week of gains. However, the small-cap Russell 2000 was down slightly, following the Fed’s interest rate cut. The upcoming nonfarm payrolls report will be crucial for market movement this week.
Two major economic drivers that led to the market rally last week were the revised GDP report and the August PCE report. The GDP growth rate was revised upwards to 3%, driven by higher federal government spending and private inventory investment. The PCE report showed inflation dropping to 2.2%, the lowest since February 2021 and close to the Fed’s target of 2% annual inflation. While the positive economic news was largely priced in, it did not spark significant movement in the markets.
As the third quarter ended, the major indexes were slightly down, with the Dow Jones, Nasdaq, and S&P 500 all posting losses. Earnings season is set to begin next week, but this week will see reports from companies like Nike, Paychex, McCormick, Conagra, Levi Strauss, and Constellation Brands. Investors are particularly focused on the nonfarm payrolls report on Friday, with economists predicting 144,000 new jobs and an unemployment rate of 4.2%. This report will be crucial in determining market movement based on employment data.
The upcoming week will be crucial for investors as they await key economic data and earnings reports. With the Dow Jones and S&P 500 at record highs, the focus will be on sustaining the momentum in large-cap indexes. The nonfarm payrolls report on Friday will be closely watched, as it will provide insights into the job market and potential impact on interest rates. Investors should remain cautious and monitor market movements closely to capitalize on potential opportunities or navigate potential risks in the coming week.
