Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed Thursday’s trading session in the red, marking the third consecutive day of declines for both indexes.
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The tepid performance comes despite an encouraging print from the labor market. Initial jobless claims for the week ended September 20 fell by 14,000 to 281,000 and have completely erased an early-month surge to 264,000. At the same time, continuing jobless claims remain stretched compared to recent years at 1.926 million as the slow-to-fire-and-hire trend persists. On Tuesday, Fed Chair Jerome Powell emphasized that “near-term risks to inflation are tilted to the upside and risks to employment to the downside – a challenging situation.”
Furthermore, the Commerce Department announced its final second quarter gross domestic product (GDP) estimate of 3.8%, above its prior estimate of 3.3%. The higher estimate was driven by falling imports and an upward revision of consumer spending growth to 2.5% from 1.6%. Imports, which rose from January to March, contributed to GDP falling by 0.6% during the first quarter, as the data is subtracted from the calculation.
On Friday, the Commerce Department will release August’s Personal Consumption Expenditures (PCE) data, which is the Fed’s preferred gauge of inflation. Economists expect PCE to rise by 0.3% month-over-month and 2.7% year-over-year.
Meanwhile, a group of former top-ranking economic leaders joined forces to pen a legal brief to the Supreme Court, challenging President Trump’s firing of Fed Governor Lisa Cook over mortgage fraud allegations while her legal case remains active. The bipartisan group includes former Fed chairs Alan Greenspan, Ben Bernanke, and Janet Yellen, as well as former Treasury Secretaries Robert Rubin, Larry Summers, and Hank Paulson.
“Allowing the government to remove a member of the Board of Governors for the first time in the Nation’s history, while under the cloud of legal challenge, will erode public confidence in the Fed’s independence and threaten the long-term stability of our economy,” read the brief.
Finally, the Office of Management and Budget, which is overseen by Trump, issued a memo outlining plans to permanently fire federal workers if the government shuts down. The layoffs will affect agencies whose goals are “not consistent with the President’s priorities” and that face a lapse in funding, putting further pressure on Democrats to agree to a funding extension before October 1.
The S&P 500 (SPX) closed with a 0.51% loss, while the Nasdaq 100 (NDX) fell by 0.46%.
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