By Rick Schwerd |
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for
our next update on September 18.
Strong Labor Market Report
The August labor market was surprisingly strong following a couple of disappointing reports. The economy added
162,000 jobs during the month, nearly three times the expected amount and the most since March. The unemployment
rate remained at a historically low 4.1 percent. The prior month’s estimate was revised higher, with the July
estimate rising from a negative 23,000 to a positive 21,000.
After a few disappointing jobs reports, it appeared that the labor market may have been weakening. This report brings
us back in line with the low-hire low-fire status quo that we have seen for much of the year.
Markets Continue to Move Sideways
Equities have been choppy over the last month as competing headwinds and tailwinds swing market sentiment. Strong
corporate earnings and future earnings estimates continue to support stocks. However, inflation concerns, oil prices
and higher interest rates are keeping equities from achieving new highs.
The price of a barrel of West Texas Intermediate (WTI) crude oil moved above $90 a barrel this week, stoking
inflation fears, with no end in sight to the Iran War. On Wednesday, the benchmark 10-year Treasury briefly topped
4.80 percent for the first time in nearly three years. Rates fell back to 4.75 percent Thursday, which led stocks to
rally.
The S&P is at 7,750, less than 1 percent off its record high of 7,799 achieved in mid-August. The Nasdaq still
hasn’t eclipsed its early June high of 27,093. It currently sits at 26,630, less than 2 percent below the
all-time high. Outside of a resolution to the Iran situation, the current choppiness is likely to continue,
especially as uncertainty surrounding the upcoming midterm elections becomes more of a focus after Labor Day.
Outstanding Earnings from Nvidia
Nvidia, the world’s largest company by market cap, reported exceptional earnings last week, resulting in a
modest rally. The firm announced year-over-year revenue growth of 106 percent while beating estimates for both
revenue and earnings. More importantly, the company stated that it expects revenue to grow by 70 percent next year,
well above analysts’ expectations of 40 to 45 percent. Furthermore, the company said that based on demand,
revenue could grow by more than 100 percent again, but supply constraints will likely prevent it from doing so. This
represents significant growth for a company with a $5.4 trillion market cap.
Jackson Hole Fed Summit
Federal Reserve Chairman Kevin Warsh was hawkish in his first Jackson Hole keynote address last week, focusing on
stubbornly elevated inflation. Warsh reaffirmed the Fed’s 2 percent inflation target, stating, “We must
be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we
have work to do.”
Warsh also reiterated his desire for a “quieter Fed,” urging investors to rely on real economic data
rather than central bank hints. On a longer-term note, he highlighted artificial intelligence as a potential
“hinge point in history” that could drive substantial productivity and GDP growth. However, he stressed
that near-term monetary policy must remain focused on price stability.
Enjoy a great Labor Day weekend and as always, if you have any questions or concerns regarding markets or your
financial planning needs, please reach out to us at (518) 415‑4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a
Senior Investment Officer at Arrow Bank. He oversees individual and corporate retirement plans, personal trusts,
investment management accounts, foundations and not‑for‑profit relationships.