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This week (September 16-20, 2024) was action-packed for the US stock market, with key moves driven by the Federal Reserve’s much-anticipated rate cut and market volatility.
The Fed cut its main interest rate by a larger-than-expected 50 basis points, aiming to navigate a soft landing for the economy amidst cooling inflation. This led to a strong rally mid-week, with the Dow Jones Industrial Average and S&P 500 reaching record highs on Thursday. However, Friday saw investors hit pause, with stocks slightly edging lower due to the “triple witching” event—a term referring to the simultaneous expiration of stock options, index options, and futures, which typically increases volatility.
Big tech had mixed results. Apple saw a dip, exacerbated by lackluster reception for its new iPhone 16, which notably lacks AI features, a point of contention in an AI-driven market. Meanwhile, Nike jumped 5% in premarket trading after announcing a CEO change.
On the other hand, FedEx stock took a hit, falling 13% after slashing its full-year outlook due to weaker-than-expected earnings and the loss of its USPS contract.
With the Fed’s aggressive rate cut dominating headlines and mixed performances from major companies, this week highlighted the market’s balancing act between optimism for lower rates and fears of slowing corporate earnings.
As we head into next week, investors should brace for a key earnings-heavy stretch. Noteworthy reports from AutoZone, KB Home, and Costco will provide critical insights into consumer behavior and the broader economic outlook. Costco, in particular, is poised to continue its strong run, with analysts expecting robust traffic growth and revenue gains despite the recent membership fee hike. Meanwhile, Micron Technology will be under the microscope as it reports earnings, with investors eager to see if memory chip prices and demand continue to recover as expected. (Side note: None of these stocks mentioned are in the DeepList – our AI-curated stock picks only for subscribers.)
On the macroeconomic front, the lingering effects of the Fed’s recent rate cut are expected to influence market sentiment. Watch for potential volatility in the bond market and how tech stocks, especially semiconductors, react as they face ongoing profit-taking pressure. Additionally, with oil prices climbing, energy stocks could continue to outperform as supply constraints tighten.
This combination of earnings reports and macro trends makes next week pivotal for determining the market’s direction heading into the final quarter of the year. Keep an eye on inflation updates and any shifts in global energy supply that could further shake up the markets.
