Stocks were mixed Monday with the Russell rallying while the Nasdaq pulled back.
Energy and Financials were the biggest winners today, adding 3.5% and 1.45% respectively. Meanwhile, Healthcare and Tech stocks weighed on the market, dropping 1.44% and 0.92% respectively.
Durable Orders data for August was released this morning and showed a better than expected rise of 1.8%, against estimates for a rise of 0.6%. This was a rebound from July’s upwardly revised reading of 0.5%. Noteworthy from the August report was a 77.9% increase in new orders for non-defense aircraft. Unfilled orders rose 1.0%, and total inventories rose 0.8%.
Looking ahead at the rest of the week, investors will be tracking debates in D.C. over both the debt ceiling and on the $550 billion infrastructure package as lawmakers try to avoid a government shutdown on October 1.
Other noteworthy events to come are the Consumer Confidence report Tuesday, earnings reports by Chinese education stocks on Thursday, and the Consumer Spending report on Friday. Additionally, investors will continue to follow Europe’s energy crisis after the governments warned of potential blackouts and factory shutdowns.
Congress
Lawmakers in DC are fast approaching crucial deadlines this week as they try to stave off a government shutdown while negotiating and voting on the infrastructure package. The vote is scheduled to take place in the House on Thursday, while the government is set to shutdown the next day on Friday, October 1 if new spending isn't approved.Starting last week, the Office of Management and Budget began warning federal agencies of the potential for a government shutdown in a customary 1-week warning, while the Treasury Department has warned that it has until around the middle of October before it will be unable to make payments, including bond coupons.
Both Treasury Secretary Janet Yellen in an op-ed for the Wall Street Journal and Federal Reserve Chair Jerome Powell during his press conference recently warned of the dangers of the U.S. defaulting on its obligations. Government shutdowns tend to be short-lived, but previous debt-ceiling showdowns have caused some volatility in financial markets.
Consumer Confidence
Congress aside, Consumer Confidence is going to draw a lot of attention on Tuesday morning when the September report is released. Consumer Confidence dipped in the last report to 113.8, marking the second consecutive month of declining consumer confidence.September’s Consumer Confidence reading is expected to snap the losing streak and edge higher to 114.4. In August, consumers were battered by steepening inflation and rising Delta Covid cases. This saw the Present Situation Index, the Expectations Index, and the One-year inflation expectations all move unfavorably in August.
Following further moderation of consumer price increases in August, declining Covid cases throughout the month of September, and the Fed taking steps towards tapering asset purchases, consumer confidence could be ready to dust itself off and jump Tuesday.
Economic Events this Week
Tuesday - 10:00 a.m. - Consumer ConfidenceWednesday - 10:30 a.m.- EIA Crude Oil Inventories
Thursday - 8:30 a.m. - Initial & Continuing Claims
Friday - 8:30 a.m. - Personal Income and Spending - 8:30 a.m. - PCE and Core PCE Prices - 10:00 a.m. - ISM Manufacturing Index