Jobs and Fed speeches could shake the rally

There was hope that once the Federal Reserve started cutting interest rates on September 18th, some kind of huge increase might occur.

It didn’t exactly happen. Interest rates rose a bit. Stocks edged slightly higher, particularly the Nasdaq Composite and Nasdaq-100 indexes.

Microsoft (MSFT) Amazon.com (AMZN) and even Apple (AAPL) decreased in the last week.

Related: PCE inflation report resets bets on another big Fed rate cut

But chip giant Nvidia (NVDA) increased by 4%. adze (TSLA) increased by 9.3%. It’s even up nearly 22% for the month and 4.8% for the year. Finally. Bitcoin is up 9.4% since the Fed’s decision and is up 54.5% for the year.

Still, it feels like a break. In part, the pause is due to anticipation of some important reports coming this week. Then there are the increasingly tough and grueling choices we have to contend with and whether or not they can be resolved 38 days from now.

But all this will fight against history in the short term and in the long term.

The math of Fed cuts alone says that lower rates should lead to higher asset prices. It doesn’t matter if it’s a house, a car, stocks or bonds.

Plus: The last quarter of any year is usually strong, especially November and December.

At the same time, China decided to start stimulating its struggling economy with lower interest rates and other measures. The Shanghai Composite rose 12.8% last week alone.

That’s the big picture. Here’s how the week is formed, going backwards.

Related: Fed offers big rate cut, signals focus on cooling labor market

The big events

Jobs report. The key event of the week is the jobs report from the Labor Department on Friday. The consensus estimate is for the unemployment rate to hold at 4.2 percent, with nonfarm payrolls rising by 144,000. As always, stay tuned for reviews. Each report comes with a revised estimate of the previous report, and these have increasingly reduced job gains.

Powell and friends talk. Fed Chairman Jerome Powell will be one of many Fed officials speaking about the economy and its risks. Powell will speak at the National Business Economics Association on Monday. Each day through Thursday, Fed governors or members of the Fed’s rate-setting body, the Federal Open Market Committee, will speak. Fed officials can spook markets. In late May, stocks fell when Minneapolis Fed President Neel Kashkari suggested that interest rates might need to be raised to control inflation.

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A potential port strike. Ports from Houston to Maine are facing a possible dock strike starting at midnight on Oct. 1 that could cripple incoming imports, including cars and auto parts, perishable vegetables and fruits — even the inflation-resistant banana. A week-long strike might not affect the economy. A prolonged strike would spell trouble, creating shortages of goods and triggering further inflationary pressures. It could force the Biden Administration to invoke the Taft-Hartley Act and order workers back to work. If there is a strike, the dock workers will join the 33,000 workers already on strike at aerospace giant Boeing. (nay) .

Related: Ford CEO says he’s tired of making ‘boring’ cars.

Also this week: An important report on how purchasing managers view the economy on Monday; a construction spending report on Tuesday and the weekly jobless claims report on Thursday.

Nike, Carnival Cruise Line, Conagra lead earnings reports

Monday is the last day of September. The first of the third-quarter earnings reports isn’t due for another two weeks.

But important earnings reports come from:

Carnival Cruise Line (CCI) falls on Monday. The company is expected to report $1.16 per share in earnings on a big jump in revenue. The cruise line business is having a huge year. Carnival odds are up nearly 20% since the end of February. Norwegian Cruise Holdings (NCLH) the stock rose 13%. Royal Caribbean (Rd) shares rose 41%.

NIKE (NKE) . It follows after the close of Tuesday. Expect the company to try to shake off all the bad news before Elliott Hill becomes CEO, returning to the company he left in 2000. Nike made a dumb bet that it could build its brands digitally by ignoring the web its important wholesalers and networkers. Shares are down 50% from a peak in November 2021. They were down as much as 33% this year through mid-July, before the company and outgoing CEO John Donahoe decided to part ways. The stock is up 23% from its July low.

Also reporting this week: ConAgra Brands (CAG) and Levi Strauss (LEVI) .

A Carnival Cruise Line ship has docked in port.

Image source: Shutterstock

What happens between now and the new year

The presidential and congressional elections are expected to be close, and there are fears that the outcome will not be known for several weeks if Donald Trump looks set to lose again, this time to Kamala Harris. This has increased uncertainty among investors. About the only vehicle that has risen strongly in recent weeks is Bitcoin.

It is not clear that much will move the markets until the outcome is clear. But markets usually pick up after elections. The S&P 500 rose 5.3% in the last two months of 2016 after Trump defeated Hillary Clinton. The rally was 14.8% after Joe Biden beat Trump in 2020. In 2004, when George W. Bush beat John Kerry, the rally was 7.2%.

However, this year has a very big wildcard. Israel has fought a brutal battle against Hamas in Gaza and now Hezbollah in Lebanon. (Israeli forces killed Hezbollah leader Hasan Nasrallah on Friday.) There is a strong possibility that the conflict will draw Iran and others into the fighting.

A smaller wildcard is what will happen in the war between Ukraine and Russia.

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