U.S. equity indexes closed higher last week, driven by improving economic data that showed stronger-than-expected growth in the manufacturing and services sector, as well as auto sales.
For the week, the benchmark S&P 500 Index settle at 2549, up 1.2%. The blue chip Dow Jones Industrial Average closed at 22774, up 1.6% and the tech-based NASDAQ Composite finished at 6590, up 1.5%.
The headline number of the U.S. Non-Farm Payrolls report came in lower than expected due to the impact of the recent hurricanes. However, the unemployment rate dropped and average hourly earnings exceeded expectations.
Volatility was steady last week, but investors should expect this to change from time to time with the emphasis on North Korea and the upcoming earnings season.
The major stock indexes did hit record highs last week with the S&P 500 posting an eight day winning streak, its longest since 2013.
Over the near-term, the markets are expected to be underpinned by low inflation, economic growth and relatively low interest rates. North Korea and a political misstep by the White House appear to be the only factors that could derail the rally.
Forecast
Early in the week, the emphasis may be on North Korea. Late last week, news broke that the rogue nation was preparing to test a long-distance rocket that could be used to strike the United States.
Monday is a U.S. bank holiday, but the stock exchanges are open. However, volatility and volume are expected to come in below average.
On Wednesday, the Fed will release the minutes from its September meeting. They are expected to be hawkish while providing insight into the Fed’s plans to raise rates a third time this year in September.
Traders will also get to respond to a multitude of Federal Open Market Committee members.
On Thursday, the U.S. will release data on producer inflation. On Friday, data on consumer inflation and retail sales will be released.
Strong inflation data will support higher rates, but this shouldn’t bother investors since it will mean the economy is heating up. Investors are focused more on earnings at this time anyway so I doubt that economic data this week will derail the rally.
This article was originally posted on FX Empire