September got off to a rough start for Wall Street. The S&P 500 declined 4.22% last week on fears of a waning labor market from the fresh jobs data. The downward revisions to the June and July payrolls have investors on edge that the Fed might have waited too long to cut rates. There is a 100% probability of a 0.25% cut at the September 18th Fed meeting. A normalizing labor market, low inflation, and an accommodative Fed could help the Fed to navigate a “soft landing.” If labor markets continue to soften, the Fed can cut rates aggressively to stimulate the economy.
This week, the latest inflation data, the Consumer Price Index and the Producer Price Index are out. The CPI increased 2.9% over the 12 months ended in June, while the PPI rose 2.2% over the same period. August Core CPI and PPI are expected to come in flat compared to the previous month.
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Regards,
David Bennett