The stock market is poised for another eventful week following ongoing geopolitical tensions and a new rate hike decision from the Federal Reserve. Key market news to watch this week includes new manufacturing, labor market, and real estate data, along with sector-level developments.
1. Tech Stocks
One important sector to continue following in the markets this week is the technology sector.
Two recent areas of concern include the Federal Reserve’s decision to hike interest rates, as well as the discourse from major AI companies about slowing down AI developments.1
Any additional geopolitical shocks could increase concerns about inflation, potentially triggering a sector sell-off. Moreover, rising US Treasury yields have recently reached a high not experienced since 2007, which may prompt some investors to rotate out of equities into safer options.2
The iShares Technology ETF (IYM) has been very volatile this year, but has still rallied by around 28.6%.
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2. Manufacturing PMI
Investors should also keep an eye on the US Flash Manufacturing PMI data, which will be released on Wednesday, September 23rd at 9:30 a.m ET.
The US manufacturing sector has begun to show initial signs of a slowdown. Manufacturing activity fell last month, after seven previous months of increases.3
While AI investments have continued to pour in, supporting new infrastructure developments, it has not been enough to offset weakness in other areas.4
Keep an eye on various manufactured ETFs this week, including the iShares U.S. Manufacturing ETF (MADE) and the Vanguard Industrials ETF (VIS).
3. Labor Market Updates
There will also be new weekly jobless claims data released in the markets this week on Thursday, September 24th at 9:30 a.m ET. Previous data was very favorable, although it was slightly overstated because of the holiday impact.5
The unemployment rate has also remained steady at 4.1%, which was one of the data points that supported the Federal Reserve’s decision to hike interest rates.
One important factor to note is that labor market activity has been inconsistent across various areas of the economy. For example, food services and accommodations job growth experienced similar weakness as it did in 2020, while healthcare and social assistance has continued to drive labor market growth.6
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4. New Home Sales
Another important area of the market to watch is the real estate sector. New home sales data will be released at 10:00 a.m ET on Thursday, September 24th.
The real estate industry has begun showing signs of a cooldown, and pending home sales data recently fell by around 4% YoY in August.7
Pending Home Sales Monthly Data
One additional concern in the industry is that mortgage rates will increase following the Fed’s rate hike decision. The 30 year mortgage rate recently approached 7%, which may put more pressure on potential new home buyers.8
Be sure to keep an eye on how real estate equities respond to these macro tensions. The Vanguard Real Estate ETF (VNQ) has declined by around 6% in the past month due to these weaker conditions.
5. Consumer Stocks
Consumer stocks may also have an eventful week, as consumers face increased pressure from rising inflation and interest rates.
There are several major consumer equities that will be releasing earnings in the markets this week.
| Company | Earnings Release Date | YTD Return |
| Autozone | Tuesday
September 22nd before the market opens |
-15.8% |
| Costco | Thursday
September 24th after the market closes |
3.8% |
| General Mills | Wednesday
September 23rd before the market opens |
-21.8% |
These results may provide more insights into the sentiment for consumer staples and consumer discretionary stocks.
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