Everything to Know about Macro and Markets
Stocks ended the volatile week with relatively small losses as Friday’s rebound helped reverse three days of declines. The S&P 500 (SPX) fell 0.31%, the Nasdaq-100 (NDX) lost 0.50%, and the Dow Jones Industrial Average (DJIA) inched down 0.15%, snapping their three-week winning streak.
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Tech Timeout and Trade Tensions
Last week was the 39th trading week of the year – historically the worst for the S&P 500, based on data going back to 1990, with the highest incidence of 1%+ drops. Given these statistics, stocks held up relatively well, as they managed to get away with a much smaller loss despite the midweek slump, thanks to Friday’s rally.
Each of the major U.S. stock indexes set record highs on Monday, but on Tuesday traders drove stocks down as Fed Chair Jerome Powell offered no hints on further monetary policy in his post-policy-meeting speech. Comments from several other Fed officials added to negative sentiment, signaling a more tempered approach to easing than investors were hoping for.
The market’s tech leaders took a breather after a hot run, pulling down the indexes with their heavy weight. In hindsight, however, the three-day slide through Thursday appears to have been a short pause, as dip buyers emerged at the first hint of positive news. Still, the tech sector remained volatile. Performance among large and megacaps was mixed, as investors fretted over elevated valuations – particularly in AI-related names – and concerns over tariffs resurfaced.
President Donald Trump unveiled a fresh round of punishing tariffs on a broad range of imported goods, including duties on branded drugs and levies on heavy-duty trucks, coming into effect this week. At the same time, media reports revealed that the White House is doubling down on reshoring semiconductor manufacturing, planning to introduce a 1:1 rule requiring chipmakers to match domestic and imported production – after a grace period to ready their U.S. plants – or face punishing tariffs.
Solid Data, Shaky Confidence
U.S. stocks bounced Friday as core PCE inflation data matched expectations, reinforcing hopes for more Federal Reserve rate cuts. Meanwhile, the U.S. economy is still firing on all cylinders, with second-quarter annualized GDP growth revised to 3.8% from 3.3%, driven by solid consumer spending. The revision marks a sharp turnaround from Q1’s slight contraction. Personal income and spending data also surprised to the upside, pointing to continued momentum in the current quarter.
By contrast, the UoM consumer sentiment index declined in September for the third consecutive month, with households increasingly concerned about inflationary pressures and labor market weakness. While inflation appears contained, despite tariff-related headlines, the labor market remains an evolving narrative. The jobs report on Friday will be an important datapoint and could directly shape the Fed’s next move.
Worries over a potential government shutdown on October 1 added to investor jitters. Historically, shutdowns have had only short-lived economic impact. The bigger risk lies in delays in publishing essential data – such as the next jobs report and inflation indexes – ahead of the next Fed meeting, raising the possibility that no decision will be made even as markets hope for more cuts.
With the retail crowd fully invested – U.S. household allocation to stocks is 50.5% of financial assets, a record high – and institutions holding their largest exposure since the dot-com bubble, volatility jolts are not surprising. While both groups remain optimistic about long-term trajectory, high valuations and full positioning could leave the market vulnerable to a sharper leg lower if sentiment turns.
Stocks That Made the News
▣ International Business Machines (IBM) – which has made TipRanks Smart Investor Newsletter subscribers a gain of 32% over 10 months, versus 12% for the S&P 500 – soared over 9% for the week after HSBC reported a breakthrough in quantum computing for bond trading, citing a 34% improvement in prediction accuracy using IBM’s Heron quantum processor. Separately, IBM is cited as one of the biggest winners alongside Palantir (PLTR), slated to win a significant portion of AI-related defense contracts in the U.S. and Europe.
▣ Electronic Arts (EA) soared nearly 15%, leading the S&P 500 gains on Friday, following media reports that the video game giant is nearing a roughly $50 billion deal to go private. The deal could be announced as early as next week, valuing EA above its current market cap of approximately $48 billion.
▣ Boeing jumped almost 4% following a report that the plane maker could soon face fewer obstacles in delivering its aircraft to customers. According to media, the FAA plans to give Boeing the ability to perform final safety checks on its planes, and also to increase the monthly production cap on the 737 Max. The plane maker also announced that it has secured two large orders from Norwegian Air and Turkish Airlines.
▣ Tesla (TSLA) climbed as Wedbush Securities analyst Dan Ives hiked his price target on the stock to $600 from $500, citing the company’s advancements in AI and autonomous technology and adding that investors are “underestimating the transformation underway.”
▣ Apple (AAPL) was the best performer among megacaps last week after Evercore ISI highlighted a “solid start” to iPhone 17 sales with strong consumer interest in the high-end models. The iPhone maker’s shares were also supported by reports that it has developed a ChatGPT-like iPhone app to help test a long-anticipated overhaul of Siri coming next year.
▣ Ford (F) and General Motors (GM) rose each to its 52-week high as investors piled into gas-powered U.S. automakers amid the looming end of the EV tax credits and a prospective repeal of vehicle emissions standards by the Trump administration.
▣ Intel (INTC) continued its surge following reports that it has approached TSMC (TSM) about potential investments or manufacturing partnerships. In addition, separated reports on additional Trump administration plans to boost domestic chip production also boosted the ailing chipmaker.
Upcoming Earnings and Dividend Announcements
U.S. companies will begin reporting their Q3 results this week, although the earnings season will officially open next week with the quarterly releases of large financial corporations. Still, some notable releases are coming, particularly from Carnival (CCL), Jefferies (JEF), Nike (NKE), Paychex (PAYX), and Acuity Brands (AYI).
Ex-dividend dates are coming this week for U.S. Bancorp (USB), American Tower (AMT), Realty Income (O), Comcast (CMCSA), Air Products and Chemicals (APD), Progressive (PGR), Bristol-Myers Squibb (BMY), Philip Morris (PM), Cisco Systems (CSCO), and other dividend-paying firms.
For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.