Market Overview
The S&P 500 Index ($SPX), along with the Dow Jones Industrial Average ($DOWI) and the Nasdaq 100 ($IUXX), experienced declines on Thursday, closing down -0.50%, -0.38%, and -0.43% respectively. December E-mini S&P and Nasdaq futures also fell, down -0.48% and -0.47% respectively.
Economic Pressure
All major U.S. stock indexes faced downward pressure, reaching one-week lows for the third consecutive session due to rising bond yields. The stronger-than-anticipated economic signals from the U.S. bolstered T-note yields following the release of positive GDP, jobless claims, and core capital goods orders data. The 10-year T-note yield peaked at a three-week high, increasing by 2 basis points to 4.17%.
U.S. Economic Data
Revisions showed that U.S. Q2 GDP rose to 3.8%, surpassing expectations. The personal consumption figure was also revised upwards to 2.5%. Additionally, the core PCE price index unexpectedly increased to 2.6%. Initial weekly unemployment claims dropped by 14,000, indicating a stronger labor market than anticipated.
Concerns Over Government Shutdown
Investor sentiment is dampened by the possibility of a U.S. government shutdown on October 1 due to lawmakers’ failure to agree on a spending bill. A recent White House memo warned that a shutdown would result in widespread dismissal of government employees not aligned with President Trump’s priorities.
Corporate Earnings Forecast
Despite current market pressures, rising earnings expectations present a bullish outlook. Over 22% of S&P 500 companies forecast Q3 earnings that exceed analysts’ expectations, with an overall anticipated growth of 6.9% in earnings for Q3.
Focus for Upcoming Week
Next week, markets will be attentive to new trade developments. Key indicators to watch include a projected increase in personal spending and income for August, along with the core PCE price index and consumer sentiment index from the University of Michigan.
Stock Updates
In individual stock news, shares of CarMax plunged by over 20% after disappointing Q2 results, while Micron Technology and ARM Holdings both declined significantly. Conversely, Lithium Americas surged more than 22% amid news of government interest. Intel rose over 8%, following reports of a potential investment partnership with Apple.
