U.S. stocks rose for the third week in a row. Extending their recovery from a sharp weekly decline in the first week of September. The S&P 500 and the Dow added 0.6% to the record-high levels they reached the previous week. The NASDAQ rose 1.0% and ended up 2.8% below a record it set more than two months ago. Maggie Smith passed away on Friday, I have broken down this week’s update using quotes from her Professor McGonagall character in Harry Potter.
“I’ve Always Wanted To Use That Spell!” – Professor McGonagall (Maggie Smith)
China has been dealing with sluggish growth, the Chinese central bank trying to use some of its magic to get the economy growing again. Mainland Chinese stocks surged as the nation’s central bank approved measures to accelerate recently the world’s second-largest economy. The People’s Bank of China on Tuesday announced plans to lower borrowing costs, inject more funds into the economy, and ease households’ mortgage repayment burdens.
“Five Points Will Be Awarded To Each Of You For Sheer Dumb Luck.” – Professor McGonagall (Maggie Smith)
Incumbent politicians are getting lucky as the price of oil continues to drop and become less of an issue this November. The price at the pump as recently as July figured to be an important issue this election cycle. However, U.S. crude oil dropped nearly 4% for the week to less than $69 per barrel on Friday. That price is down from the July high of nearly $84 per barrel. The oil sell off was triggered by a report that Saudi Arabia is committed to increasing production later this year, even if it results in lower prices for a prolonged period.
“Potter, Take Weasley With You, He Looks Far Too Happy Over There.” – Professor McGonagall (Maggie Smith)
Investors have been far too happy. Stocks hit new record highs again last week, riding the wave of optimism that has come from the Fed’s recent rate cut. We got another data point this week and it’s the one that carries a lot of wait with the Federal Reserve. It’s their preferred inflation gauge. On Friday it showed further slow-but-steady easing of price pressures. The Personal Consumption Expenditures (PCE) Index rose at an annual rate of 2.2% in August, slightly below economists’ consensus forecast and the lowest figure since February 2021. Excluding energy and food prices, the core PCE Index rose 2.7%, matching expectations. Lower inflation data makes investors more hopeful about the possibility of further interest rate cuts by the Fed.
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