Equity Markets Advanced for Third Straight Week

Despite moments of trepidation, the stock market ended positive for three straight weeks. And even with its rough start, August marked the fourth month in a row of positive returns. Several encouraging reports suggested that the economy is holding up and inflation is moderating, keeping alive hopes of a soft landing and a September rate cut by the Federal Reserve. The Dow posted the largest gain to close out the week at an all-time high. The large caps of the S&P 500 posted a modest gain, the small caps of the Russell 2000 treaded water and the tech-heavy NASDAQ ended the week in the red. Financials, energy and materials were the top-performing sectors, while information technology and communication services lagged.

GDP Grew 3.0% in Second Quarter

The economy grew at an annualized rate of 3.0% in the second quarter, according to the second estimate of gross domestic product (GDP). GDP accelerated at a rate of 1.4% in the first quarter. The personal consumption expenditures (PCE) price index increased 2.5%. Excluding food and energy prices, the PCE price index increased 2.8%. Consumer spending, as measured by the personal consumption expenditures index, rose 2.9%. Spending on goods increased 3.0%, while spending on services climbed 2.9%.

Eye on the Week Ahead

Results from the August purchasing managers’ indexes (PMI) for manufacturing and services will be released this week. Two important employment reports for August are also coming out. Labor market data is highly anticipated at this critical juncture for the economy, especially after last month’s disappointing jobs report raised expectations that the Federal Reserve will cut interest rates substantially in September.