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On Thursday, September 21, 2023, the S&P 500 Index closed up +0.80% at a four-month high, while the Dow Jones Industrials Index rose +0.94%, marking a 3-3/4 month high, and the Nasdaq 100 Index surged +0.94% to set a new all-time high. Strong performance in chip makers contributed to this market rally, supported by better-than-expected reports on initial unemployment claims, capital goods orders, and pending home sales.
The weekly initial unemployment claims dipped by 7,000 to 236,000, against expectations of 243,000, indicating a stronger labor market. However, continuing claims increased by 37,000 to a 3-1/2 year high of 1.974 million, suggesting longer-term unemployment issues. Additionally, Q1 GDP was revised down to -0.5% from -0.2%, coupled with a trade deficit in May of -$96.6 billion, which was wider than the anticipated -$86.1 billion.
Market participants are also monitoring geopolitical developments, including a ceasefire between Israel and Iran, as well as economic indicators expected on Friday, including personal spending and income data. Federal funds futures currently suggest a 21% chance of a rate cut at the upcoming FOMC meeting on July 29-30, amidst speculation of a potential early replacement for Fed Chair Powell.
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