- Following a quiet month, the Dow, S&P 500, and Nasdaq could all end October at record highs.
- However, a slew of economic data releases could inject renewed volatility into the market.
- Here’s what investors should look out for this week.
The Dow sprang higher on Monday, as the US stock market’s three primary indices all ticked closer toward ending the month at new all-time highs.
October has been a relatively quiet month for US stocks. Neither third-quarter earnings results, new developments in the trade war, nor recession warnings managed to ignite a breakout.
Will this week’s data deluge change that?
Dow, S&P 500, and Nasdaq All Target New All-Time Highs
On Monday, the Dow Jones Industrial Average closed the session at 27,090.72 for a gain of 132.66 points or 0.49%. After trading within a 1,000 point range throughout the month, the Dow now sits about 300 points short of 27,398.68, the highwater mark it set in July.
The S&P 500 closed at 3,039.42, a new record high for the large-cap index, which rallied 16.87 points or 0.56%.
The Nasdaq outperformed its peers, jumping 82.87 points or 1.01% to 8,325.99. The tech-heavy index now sits within a handful of points of setting a new record above 8,339.64.
However, standing in the way of the US stock market’s push toward new highs are a slew of data releases set to drop over the next four days.
Economic Growth Indicators Could Dampen – or Magnify – Recession Alarms
Chief on Wall Street’s mind will be the following data releases, which will provide a broad picture of US economic growth. Positive data could dampen recession warnings, but worse-than-expected readings could magnify bearish forecasts.
- Advance GDP (Oct. 30, 8:30 am)
- Advance GDP Price Index (Oct. 30, 8:30 am)
- Core PCE Price Index (Oct. 31, 8:30 am)
- Employment Cost Index (Oct. 31, 8:30 am)
The US economy continues to bask in its longest-ever expansion. No one denies that the expansion can’t last forever, but analysts disagree about when the next recession will strike – and what it will look like once it arrives.
Manufacturing Data Reveals Impact of Trade War on US Economy
Although President Trump touts the trade war as a boon to the US economy, recent data releases have made it difficult to deny that tariffs are weighing on the manufacturing sector.
- Chicago PMI (Oct. 31, 9:45 am)
- Final Manufacturing PMI (Nov. 1, 9:45 am)
- ISM Manufacturing PMI (Nov. 1, 10 am)
That final release is particularly important. ISM Manufacturing PMI has missed economist estimates for three consecutive months – and contracted for the last two.
Will Consumer Data Continue to Weaken?
Robust consumer data helped fortify the economy against a recession for much of the year, even as the manufacturing sector continued to post disappointing numbers. However, there’s growing evidence that the US consumer is weakening, and Dow Jones bulls will hope to see these data releases buck against that trend.
- Consumer Confidence (Oct. 29, 10 am)
- ADP Non-Farm Employment Change (Oct. 30, 8:15 am)
- Personal Spending (Oct. 31, 8:30 am)
- Personal Income (Oct. 31, 8:30 am)
- Unemployment Claims (Oct. 31, 8:30 am)
- Average Hourly Earnings (Nov. 1, 8:30 am)
- BLS Non-Farm Employment Change (Nov. 1, 8:30 am)
- Unemployment Rate (Nov. 1, 8:30 am)
Additionally, the following data will provide more insight into the state of the construction sector, as analysts continue to watch for signs of a housing market crash.
- S&P/CS Composite-20 HIP (Oct. 29, 9 am)
- Pending Home Sales (Oct. 29, 10 am)
- Construction Spending (Nov. 1, 10 am)
Chinese Data Will Show the Success (or Failure) of Trump’s Tariffs
While the trade war has begun to impact the US economy, it’s also intensified China’s slowdown. Weakness in the mainland economy could encourage China to be more proactive about pursuing a comprehensive trade deal, so investors will monitor these Chinese data releases alongside the ever-shifting rhetoric out of Washington and Beijing.
- Manufacturing PMI (Oct. 30, 9 pm)
- Non-Manufacturing PMI (Oct. 30, 9 pm)
- Caixin Manufacturing PMI (Oct. 31, 9:45 pm)
Fed Policy Statement & Jerome Powell’s Remarks Loom
Nearly as important as these data releases is what the Federal Reserve believes they indicate about the health of the US economy.
On Tuesday (Oct. 29), the FOMC will convene its second-to-last policy meeting of the year. The market has already priced in a third straight interest rate cut, but the official FOMC statement, followed closely by Fed Chair Jerome Powell’s press conference, could trigger substantial volatility on Wednesday afternoon (Oct. 30).
Investors will scrutinize those remarks for clues about whether the Fed intends to commit to a deliberate easing cycle (bullish for the Dow), pivot toward a neutral stance (bearish), or continue to keep the market guessing about its future policy actions (the most likely scenario).