Good Morning,
I hope everyone had a great weekend! It’s hard to believe Wednesday is the start of October and opening day of archery season. Good luck to all the hunters!
Stocks opened mostly higher this morning coming off a modestly lower week which saw a few promising economic reports. Q2 GDP was revised higher to 3.8% (from 3.3%) and the Fed’s preferred measure of inflation (PCE) came in as expected. The Fed is more focused on employment (opposed to inflation) as it relates to the future of interest rates which makes this Friday’s jobs report significant. Expectations are for a gain of ~50K jobs vs ~22K in August. I think the overall economic outlook is positive for stocks as growth remains resilient ahead of what is likely an interest rate cutting cycle. The “elephant in the room” is the looming government shutdown that could happen this week. Historically, over the last 20 shutdowns, the S&P 500 has been minimally impacted with the average return being ~-0.1% the week prior to a shutdown, roughly flat during, and ~0.6% higher the week after. I think a shutdown would be short-lived but could disrupt near-term momentum with potential delays in the release of the important upcoming jobs data. We have seen this market broaden out a bit and I continue to favor quality value names given the overall set-up. Please continue to reach out with questions.
Attached, please find this week’s Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist of Oppenheimer Asset Management.
Have a great week!