U.S. Stock Markets Down Slightly, Powell’s Speech in the Spotlight

U.S. stocks declined on Monday, although September is still expected to be a positive month. Investors are looking for signals from Federal Reserve Chairman Jerome Powell regarding potential future interest rate cuts. The last trading day of the month may start on a slightly bearish note. However, the Fed’s decision to cut interest rates by 50 basis points has set September on track to be positive, despite historically being a challenging month for the stock market.

The Dow Jones index has gained nearly 1.8% in September, ending Friday’s session at new all-time highs. Meanwhile, the S&P 500 index rose by 1.6%, and the tech-heavy Nasdaq advanced nearly 2.3% for the month.

Optimism is building as investors expect the Federal Reserve to implement another significant 50-basis-point interest rate cut at its upcoming meeting. This expectation is due to easing price pressures and a weakening labor market. With these factors in mind, traders are focusing on Powell’s comments about his economic outlook at the National Association for Business Economics annual meeting in Tennessee later in the session.

Additionally, attention will shift to Friday’s release of the October nonfarm payrolls report. Economists expect the U.S. economy to have added around 144,000 jobs. Investors are eager to see if the jobs data will support estimates of a soft landing scenario, where the Fed can curb inflation without significantly harming economic growth, or whether it will reignite concerns of a possible recession.

On the corporate front, Carnival (CCL) is set to release its quarterly results on Monday as the third quarter comes to a close. Meanwhile, shares of Stellantis (STLA) plummeted more than 10% before the market opened. The auto giant, known for brands like Dodge, Jeep, and Chrysler, slashed its full-year guidance and announced it would need to spend more cash than anticipated. Stellantis cited worsening industry trends, higher costs related to overhauling its U.S. operations, and increased competition from electric vehicles in China as key reasons for the revised forecast.

In sector performance, Consumer Discretionary was the top performer in the S&P 500 in September, rising by 7.3% for the month. It was followed by the utilities sector, which gained nearly 6%. However, the financials, energy, and healthcare sectors all posted declines this month.

Oil prices rose on Monday, driven by concerns over escalating conflict in the Middle East as Israel intensified its attacks on Iranian-backed Hezbollah and Houthi militant groups. Israel reported bombing Houthi targets in Yemen on Sunday, days after killing Hezbollah leader Sayyed Hassan Nasrallah, marking an escalation in the conflict in Lebanon.

Last week, oil prices fell due to demand concerns as China’s fiscal stimulus efforts, aimed at boosting the world’s second-largest economy and top oil importer, failed to reassure market confidence.