The S & P 500 gained more than 1% this week, but it sure didn’t feel that way after the market’s big slide on Friday. Let’s talk a little bit more about what happened. Leading up to the September jobs report on Friday morning, there was an argument that if the labor market started to show signs of cracking — with wages moderating and job gains slowing — this would give way to the possibility of the Federal Reserve only doing a couple more medium rate hikes to rein in inflation before pausing. But as the better-than-expected jobs report showed , the Fed still has plenty more rate hikes left in the tank — an understanding that caused the Dow to plummet by more than 600 points Friday. The central bank has the cover it needs with the unemployment rate back down to 3.5% . The numbers are still in the hawks’ favor and they continue to be right. We are on a course where the Fed has to continue to raise rates aggressively to combat rising prices. That said, we could get a positive surprise next week, if we see the highly anticipated Producer Price Index and Consumer Price Index reports — released on Wednesday and Thursday, respectively — come in weaker than expected. The setup into CPI and PPI this month will be better than next month, but we need to see some letup in inflation, or else the Fed will continue to be relentless. If we don’t get the break we need to see in the inflation data, the near-term stock opportunities may be limited, at least until the S & P Short Range Oscillator becomes grossly oversold, much as it was at the end of last week. A reading of minus 4% to minus 5% may not cut it. (Anything below a minus 5% indicates the market is oversold.) Still, we believe in the seasonality of the charts as laid out this week , and we do recognize that tech is hated because of the Covid pull-forward (think Advanced Micro Devices ) and oil is loved because OPEC+ is cutting its output. History is also on the market’s side in this midterm election year. So we will have to pick and choose what to buy as prices fall. Many companies are now trading well below where they should be, but until we get some sign that the Fed may be nearing its end of rate hikes, the value out there is limited. The equity markets are up against a 2-Year Treasury that offers a compelling risk-free return north of 4% that stocks simply cannot compete with. If yields continue to go higher, stocks will continue to struggle. As for the week that was, energy led all sectors to the upside, followed by industrials and materials. Real estate led to the downside followed by utilities and consumer discretionary. Meanwhile, the U.S. dollar index is hovering around the 112 level. Gold rebounded back to around $1,700 per ounce. West Texas Intermediate crude prices climbed back over $90 on news that OPEC+ will cut crude production next month. The yield on the 10-year Treasury advanced to around 3.9% on the back of the September nonfarm payroll report. Looking back We got earnings results from Constellation Brands (STZ) on Thursday. On Monday, ISM Manufacturing data came in at 50.9 for the month of September, below the 52 level expected. On Tuesday, factory orders were reported to be unchanged in August, in line with expectations. On Wednesday, ADP reported that the labor market added 208,000 jobs in September, more than the 200,000 expected by analysts. Also Wednesday, ISM Services came in at 56.7, better than expectations for a 56 reading. On Thursday, initial jobless claims for the week ending Oct. 1 came in at 219,000, an increase of 29,000 from the prior week and above expectations of 204,000. Finally on Friday, nonfarm payrolls were reported to increase by 263,000 in September, below the 275,000 estimate. However, despite the lower-than-expected reading — a would-be positive for a market concerned with Fed rate hikes — investors keyed into a drop in the unemployment rate that will likely force the Fed to raise rates by another 75 basis points in November. What’s ahead Earnings kick off next week. Within the portfolio, we will hear from Wells Fargo (WFC) and Morgan Stanley (MS) on Friday before the opening bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Tuesday, October 11 Before the bell: AZZ Inc (AZZ) Wednesday, October 12 Before the bell: PepsiCo (PEP), Wipro Ltd (WIT) After the bell: Duck Creek Tech (DCT) 8:30 a.m. ET: Producer Price Index 2:00 p.m. ET: FOMC Minutes Thursday, October 13 Before the bell: Taiwan Semi (TSM), Delta Air Lines (DAL), BlackRock (BLK), Fastenal (FAST), Progressive (PGR), Wallgreens Boots Alliance (WBA), Domino’s Pizza (DPZ) 8:30 a.m. ET: Initial Jobless Claims 8:30 a.m. ET: Consumer Price Index Friday, October 14 Before the bell: JPMorgan Chase (JPM), Citigroup (C), UnitedHealth Group (UNH), PNC Financial (PNC), US Bancorp (USB) , First Republic Bank (FRC) 8:30 a.m. ET: Retail Sales (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor of the New York Stock Exchange on Wall Street in New York City.
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The S&P 500 gained more than 1% this week, but it sure didn’t feel that way after the market’s big slide on Friday.
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