Stocks appear to continue their upward trend on Friday from the previous session, but traders are cautious as they scrutinize key data points. The focus of the report is on the Federal Reserve's preferred inflation gauge, part of the Bureau of Economic Analysis' personal income and spending report. NKE, NKE, posted positive earnings, providing support to the market. Bond yields are easing, and oil prices are also on traders' radar.
The looming threat of a government shutdown in the absence of a deal could have a significant effect on traders' minds.
Federal Reserve Chairman Jerome Powell addressed the significance of clear communication from the central bank during a town hall with teachers after Thursday's market closed. He had no comment on the current state of the economy or near-term monetary policy.
Monday's trading saw a surge in major indices, driven by a decline in bond yields. While stocks were initially lower at this point, it turned positive as the 10-year yield regressed from its peak of 4.688%.
The top sectors included communication services, consumer discretionary, and materials, while IT services and utilities lagged behind.
With the market playing in line with typical seasonality so far this year, manager Ryan Detrick said he expects a strong fourth quarter. Pre-election years usually tend to be strong, with most of those gains happening early, he said.
In August, a 4% month-over-month gain was faster than July's 0.2% gain. However, the month-over-month growth in personal spending is forecasted to slow from 0.8% to 0.4%.
The annual inflation rate of the core personal consumption expenditure index, aka the Fed's favorite inflation gauge, is expected to slow from 4.2% in July to 3.9% in August.
The ISM-Chicago will release its Chicago business barometer on Thursday at 9:45 a.m. EDT. Economists on average expect the index to sink further into contraction territory, probably coming in at 47.6 in September, down from 48.7 in August.
The University of Michigan's final consumer sentiment reading for September will be released at 10 a.m. EDT. The consumer sentiment index is expected to drop to 67.7 in September, down from 69.5 in August. Inflation expectations for the first and five years may be 3.1% and 2.7%, respectively.
Crude oil futures rose 0.86% in the first European session on Friday, following the 2.10% retreat on Thursday.
Most Asian markets rose on Friday, following the positive trend from Wall Street overnight, although the Japanese market edged lower. The market in Malaysia, opened after a public holiday, saw steep losses. The Chinese market remained closed for a public holiday.
By late-morning trading, European stocks advanced strongly as data showed that the eurozone inflation dropped to a two-year low, allowing for a possible rate cut.