After a week of records, there’s one main market event that could change everything

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After a week of records, there’s one main market event that could change everything

The S & P 500 index dipped Friday but logged its third straight weekly gain on the back of three record closes last week. For the week, the S & P 500 rose just over 0.6%; the Dow Jones Industrial Average , which closed at another record Friday, gained almost 0.6%; the Nasdaq advanced nearly 1% but remained a few percentage points below the all-time closing high on July 10. Friday brought further confirmation that inflation remained on the right path. While stocks did not react much, the 10-year Treasury yield moved lower. That’s a big deal because while the shorter end of the bond market yield curve largely declined since the Federal Reserve’s 50 basis point interest rate cut the prior week, the longer end has actually been moving higher, which does not help lower mortgage rates much. The August numbers from the Fed’s favorite inflation gauge , which were out before Friday’s opening bell on Wall Street, were tame. The headline personal consumption expenditures (PCE) price index rose 2.2% year over year — lower than estimates and the smallest increase since February 2021. Core PCE, which excludes volatile food and energy prices, rose 2.7% year over year — right in line with expectations. The Fed’s target inflation rate is 2%, so we’re getting closer. With no surprises on inflation preceded by fewer than expected weekly jobless claims and a solid final reading on second-quarter economic growth on Thursday, investors felt comfortable riding out last week. As the market anticipates 75 basis points worth of further Fed rate cuts by year-end, moderating inflation and an economy holding up continued to be a nice backdrop to own stocks. The rally in stocks last week exacerbated the market’s overbought condition. The S & P Short Range Oscillator on Friday remained overbought for the ninth straight session but only just above the threshold. Our discipline mandates us to consider trimming stocks when the market is overbought. On Friday , we trimmed our GE Healthcare position — and on Wednesday , we made small sales in Meta Platforms , Alphabet , and Danaher . Costco was our lone Club name to report earnings last week. After Thursday’s close, the retailer delivered a quarterly earnings beat and a small revenue miss. The numbers were just OK but still offered plenty of reminders on why Costco investors should stick around. We increased our price target to $950 per share from $875 but kept our wait-for-a-pullback 2 rating in case the next move in lower before going higher. In the week ahead, we get quarterly results from Club name Constellation Brands and the government’s September employment report. Jobs, Jobs, Jobs This coming Friday’s big update on the state of the labor market is the main market event and could have big implications for Wall Street and the path for Fed rate cuts. The data will be especially scrutinized given it’s the first reading we’re getting since the central bank kicked off a monetary easing cycle at its September meeting earlier this month. At the time, Fed Chairman Jerome Powell indicated that policymakers would be paying much closer attention to the labor market, saying they see the “risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks to both sides of our dual mandate.” Remember, roughly two-thirds of U.S. economic activity is driven by consumer spending. As a result, stable employment and wages are key to avoiding a recession. Economists are expecting for September 150,000 nonfarm payroll additions, a steady 4.2% unemployment rate, and a 3.8% annual increase in hourly wages, which would also be in line with August. Prior to Friday’s jobs report, ADP releases its September look at hiring trends at U.S. companies. The Street is looking for 125,000 private payroll additions. While an important report, ADP is mainly used to handicap the government’s nonfarm payrolls number. As a barometer, ADP has been better lately after being largely off during Covid and immediately following the pandemic. Beer business Constellation Brands is set to report before Thursday’s open. The Modelo, Corona and Pacifico company updated its fiscal year 2025 guidance on Sept. 3, lowering its net sales outlook to reflect slight headwinds in its beer business and ongoing challenges in wine and spirits. However, the market took the news in stride because recent weakness in the stock was already reflecting the sluggish sales environment. There was also a sigh of relief because management raised the lower end of its full-year earnings per share outlook on the expectation that higher beer margins will offset the slower top-line growth. With this revision behind us, we’ll be focused on Constellation Brands’ ability to improve beer volumes and maintain strong margins in the quarters ahead. We’re also curious about what new plans management has for the wine and spirits business and whether they stepped up the company’s stock buyback program after shares dipped under $240 each in late summer. Week ahead Monday, Sept. 30 Before the bell: Carnival (CCL) Tuesday, Oct. 1 10 a.m. ET: ISM Manufacturing PMI 10 a.m. ET: JOLTS Job Openings Before the bell: Paychex (PAYX), McCormick & Co (MKC) After the bell: Nike (NKE) Wednesday, Oct. 2 8:15 a.m. ET: September ADP Report Before the bell: Conagra (CAG) After the bell: Levi Strauss (LEVI) Thursday, Oct. 3 8:30 a.m. ET: Initial Jobless Claims 10:00 a.m. ET: Factory Orders 10 a.m. ET: ISM Services PMI Before the bell: Constellation Brands (STZ) Friday, Oct. 4 8:30 a.m. ET: September Employment Report (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

People walk outside of the New York Stock Exchange (NYSE) on September 13, 2024, in New York City.

Spencer Platt | Getty Images

The S&P 500 index dipped Friday but logged its third straight weekly gain on the back of three record closes last week.

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