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Weekly Market Brief: September 5, 2023

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Week in Review

Stocks ended August on a high note, as the NASDAQ Composite led large cap indexes with a 3.25% gain. The catalyst was US Treasury rates, which fell for the first time since early July. The US Dollar index, however, rose for the seventh straight week, a streak matched only once over the last 20 years. Gold notched its second straight week of gains, while crude oil jumped 7% to reach its highest level since November.

The labor market is still strong, but we’re starting to see signs of softening. Last week, we learned that job openings in July fell to 8.8M. That’s still more than the current number of unemployed persons in the BLS nonfarm payrolls report, but down sharply from last year’s peak of more than 12M openings. Friday’s job report confirmed the slowdown. Even though the economy added 187,000 jobs in August, negative revisions to payrolls from the prior two months totaled 110,000, resulting in a net of just 77,000 jobs. With those revisions, the unemployment rate rose from 3.5% to 3.8% – the highest mark in 18 months.

Relatively Speaking

Only one sector managed to end August in the green: Energy. Thanks in part to a big rally in the price of crude oil, Energy stocks jumped 3.8% for the month, outperforming the 1.3% decline for the S&P 500. Risk-off sectors like Utilities (-6%), Consumer Staples (-4%), and Real Estate (-3%) brought up the rear.

Growth sectors are still in the pole position year-to-date, with Communication Services, Information Technology, and Consumer Discretionary each up more than 30% since December. Investing in any other area would have yielded a return well below that of the S&P 500’s 17.6% YTD gain. Risk-off groups are all down for the year, paced by an 11.8% drop in the Utilities sector.

What’s Ahead

Here are the key data releases and events to keep on eye on in the coming days.