Today, the stock market presented a mixed bag as the new quarter kicked off. The Nasdaq edged higher by about 0.5%, while the Dow Jones Industrial Average dipped around 0.1%. The S&P 500 remained relatively flat. Goldman Sachs strategists chimed in, noting that tech sector valuations are “historically cheap.”
Over the weekend, Congress pulled off a last-minute deal to dodge a government shutdown, offering a temporary respite to investors. Senate Majority Leader Chuck Schumer announced, “I have very good news for the country. The government will remain open.” President Biden signed the bill just 45 minutes before the midnight deadline. However, this agreement merely kicks the can down the road, setting up another potential showdown on November 17.
Joshua Bolten, CEO of the Business Roundtable, was quick to issue a statement: “We thank Members of Congress for working together to prevent a shutdown and encourage the House and Senate to pass a long-term spending measure as soon as possible.” The sentiment was echoed by Maya MacGuineas, president of the Committee for a Responsible Federal Budget, who said, “It’s a relief and good news that we will not have a government shutdown; it shouldn’t have been this complicated.” She added, “The challenge now is to ensure that we don’t do this all over again in six weeks.”
The bill also averted a crisis for the aviation industry by temporarily re-authorizing the Federal Aviation Administration (FAA) through the end of the year. Sen. Maria Cantwell noted that the new law “will ensure continuity at the FAA and avoid pointless disruptions for the traveling public.”
Despite the temporary relief, the market still faces other challenges. Oil prices and Treasury yields are on the rise, adding more pressure. Some traders speculate that the Fed might hike rates in November, especially after the weekend’s budget deal. Jerome Powell, the Fed Chair, is set to participate in a roundtable discussion later today, which could offer more insights into the central bank’s thinking.
The auto sector is also in focus this week as companies report Q3 deliveries. The ongoing United Auto Workers strike, which recently expanded to more Ford and GM plants, adds another layer of uncertainty.
Internationally, the World Bank cut its growth outlook for China in 2024, citing the country’s failure to fully recover from the pandemic and the ongoing debt crisis in its property sector. This has sparked concerns about global demand, given China’s role as the world’s second-largest economy.
In the political arena, tensions are high. House Speaker Kevin McCarthy managed to pass a bill with bipartisan support, but not without criticism from his own ranks. Rep. Andy Biggs accused McCarthy of caving to Democrats, questioning his role as Speaker. McCarthy retorted, “If somebody wants to remove [me] because I want to be the adult in the room, go ahead and try.”
As the market navigates these multiple headwinds, investors are also keenly awaiting the September US jobs report due later this week. The data could provide crucial insights into the health of the economy, especially in the wake of the Federal Reserve’s recent announcements.
