Stay Informed: Stock Market Updates September 28, 2023

The U.S. stock market showed resilience on Thursday, September 28, 2023, with all major indexes closing higher. The Dow Jones Industrial Average added 115 points to its value, while the S&P 500 and the Nasdaq posted gains of 0.6% and 0.8%, respectively. This positive performance came against the backdrop of several significant developments in the financial landscape.

Economic Data Insights

One key highlight was the U.S. economy’s steady growth in the second quarter of 2023. The Gross Domestic Product (GDP) continued to advance, maintaining an annualized growth rate of 2.1%. This figure remained unchanged from the previous estimate but followed an upwardly revised 2.2% growth in the first quarter. While this suggests a robust economic foundation, there were some noteworthy details in the data.

source: tradingeconomics.com

Consumer spending, for instance, fell short of initial expectations, growing at just 0.8%, a significant deviation from the earlier estimate of 1.7%. However, the picture wasn’t entirely negative, as there were upward revisions in nonresidential fixed investment (7.4% vs. 6.1%), exports (-9.3% vs. -10.6%), and residential investment (-2.2% vs. -3.6%). Government spending also increased by 3.3%, aligning with previous estimates.

Additionally, it’s important to note that the Bureau of Economic Analysis made annual revisions to economic data, accounting for factors such as seasonal weather patterns and holidays. As a result, economic growth for the full year 2022 was revised downward by 0.2 percentage points to 1.9%. Looking ahead to 2023, the Federal Reserve maintains its outlook of 2.1% economic growth.

Corporate Profits and Market Concerns

Corporate profits in the United States increased by a modest 0.5% to reach USD 2.60 trillion in the second quarter of 2023. This figure fell short of preliminary estimates, which had projected a 1.6% rise. The data underscored concerns about elevated interest rates, as the yield on the U.S. 10-year Treasury note surged to 4.65%, reaching levels not seen since July 2007.

Interestingly, initial jobless claims remained relatively stable, defying expectations of a sharper increase and reinforcing the notion of a tight labor market. However, other factors, such as the U.S. national debt surpassing $33 trillion and the looming October 1st deadline for the 2024 budget deal, contributed to market uncertainties.

Housing Market Challenges

The U.S. housing market faced significant headwinds as pending home sales plummeted by 7.1% month-over-month in August 2023. This marked the steepest decline in nearly a year, significantly exceeding market expectations. High-interest rates pushed mortgage rates above 7%, causing many prospective buyers to reassess their housing preferences and affordability.

Manufacturing and Employment Trends

The Kansas City Fed’s Manufacturing Production Index dropped to -13 in September 2023, indicating a slowdown in the U.S. industrial sector. This negative trend was reflected in a faster deterioration in new orders, although the number of employees remained robust.

Mortgage Rates on the Rise

Mortgage rates continued their upward trajectory, with the average rate on a 30-year fixed mortgage reaching 7.31% as of September 28th, the highest level since 2000. This increase was in line with rising U.S. Treasury yields and has impacted both buyers and sellers in the housing market.

Cryptocurrency Gains

Cryptocurrencies displayed strength, with Ether leading the charge with a 4.17% gain, followed closely by Bitcoin, which saw a 3.48% increase.

Dollar Index and Currency Movements

The dollar index initially gained ground but later fell to 106.3, remaining close to its 10-month peak of 106.839. Investors closely monitored economic data for insights into the Federal Reserve’s monetary policy trajectory, especially following the recent Fed meeting.

Conclusion

In summary, Thursday’s market activity highlighted the resilience of the U.S. stock market in the face of mixed economic data and ongoing speculation regarding Federal Reserve policy. Investors remained attentive to Federal Reserve Chair Powell’s scheduled speech for further insights into the direction of interest rate hikes. With various economic indicators pointing in different directions, market participants are poised to adapt to evolving conditions in the weeks ahead.

For Investors

Today, US stock indices rose pleasantly, but let’s not rush to celebrate. Macroeconomic indicators are still weak. Market participants are now actively following the US budget drama, which will culminate on September 30. So, if there are no significant news tomorrow, the calendar doesn’t promise much excitement, but trading could still be quite interesting. Investors may choose to close positions to avoid weekend risk. However, such risk management could lead to a collapse. The best advice is not to watch the market at all. You won’t make hasty decisions that you might regret later. Then, if prices drop, you can add to your portfolios at a discount.