Moe’s Market Memo

By Hightower St. Louis on September 26, 2024

Weekly data-driven insights on the markets and economy

Fourth Week of September 2024

Daily Record Breaking Seemingly the Norm

September is wrapping up closing at fresh new highs nearly daily with the S&P 500 at 5,734, the Nasdaq at 18,130 and the Dow just north of the 42k mark of 42,072 on Wednesday. Though fears of a slowing economy still linger after last week’s 50bps cut, the three averages are on track for a positive September. All eyes will be closely focused on Thursday’s weekly jobless claims and Friday’s PCE reports.[i]

Fed’s Fave PCE Inflation Gauge Likely to Bolster More Rate Cuts

Although the rate of inflation will likely show prices rising higher than the Central Bank’s 2% goal, its downward trend should open the door to further cuts in interest rates. Blackrock’s Chief Investment Officer says that although U.S. Stock prices might be in record territory, it’s the bond market that has hit a “golden age,” and has expectations that rates will persistently move lower over the next two years.[ii]

Healthy Demand for The Latest Apple iPhone

Leading with its “Apple Intelligence,” Apple’s newest smartphones are showing healthy demand from early delivery data. Although Apple Intelligence within the phones won’t be available until October via a software update, data using supply chain information from Asia is showing over 90 million phones on its initial launch.[iii]

Time to Refi?

Applications to refinance a home loan surged 20% last week from the previous week, and the refinance share of total applications rose to 55.7%. Interestingly, average loan sizes are breaking historical records, with last week’s average hitting $413,100. Although the new applications have surged, the level of refinance activity is still modest compared to prior waves. This perhaps gives evidence that some homeowners remain on the sidelines looking for even softer economic data and potential rates.[iv]

Too Early for Holiday Shopping?

Online spending during the holiday season reached $221.8 billion last year and is still expected to surge this year another 8-9%, according to Adobe’s latest figures. What’s leading the charge? Strong discounts of as much as 30% off categories such as electronics, appliances and sporting goods. Buy Now Pay Later services such as Affirm and Klarna, which allow consumers to pay in installments, will drive $9.5 billion in sales in November alone, with the largest day on record being Cyber Monday.[v]

DOJ VS. VISA

The U.S. Department of Justice filed a lawsuit Tuesday against the credit card giant, alleging that Visa is a monopoly, and blocking rivals from offering lower-priced debit products. According to the complaint, more than 60% of debit transactions in the U.S. uses Visa’s network, with the company earning roughly $7 billion in processing fees. Visa countered saying the suit is “meritless,” pointing to the rise of other payment companies that provide debit services, saying “there is an ever-expanding universe of companies offering new ways to pay of goods and services.”[vi]

Mohammad Abouchleih, MBA
Investment Analyst

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[i] Pound, Jesse and Evans, Brian, “S&P 500 is little changed after hitting fresh record high: Live updates,” CNBC, September 25, 2024, https://www.cnbc.com/2024/09/24/stock-market-today-live-updates.html. Accessed September 25, 2024.

[ii] Bartash, Jeffry, “Fed’s favorite PCE inflation gauge likely to show cooling inflation and back further rate cuts,” MarketWatch, September 24, 2024, https://www.marketwatch.com/story/feds-favorite-pce-inflation-gauge-likely-to-show-slower-price-increases-and-back-further-rate-cuts-834b49ce?mod=home-page. Accessed September 25, 2024.

[iii] Seitz, Patrick, “Apple iPhone 16 Early Demand Deemed Healthy,” Investor’s Business Daily, September 23, 2024, https://www.investors.com/news/technology/apple-stock-iphone-16-early-demand-deemed-healthy/. Accessed September 25, 2024.

[iv] Olick, Diana, “Mortgage refinance boom takes hold, as weekly demand surges 20%,” CNBC, September 25, 2024, https://www.cnbc.com/2024/09/25/mortgage-refinance-boom-takes-hold-as-weekly-demand-surges-20percent.html. Accessed September 25, 2024.

[v] Genovese, Daniella, “Buy now, pay later discounts drive holiday spending,” FOXBusiness, September 25, 2024, https://www.foxbusiness.com/lifestyle/buy-now-pay-later-discounts-drive-holiday-spending. Accessed September 25, 2024.

[vi] Sherter, Alain, “Visa monopolizes debit cards, hurting consumers and businesses, Justice Department alleges, CBS NEWS, September 24, 2024, https://www.cbsnews.com/news/visa-debit-cards-justice-department-lawsuit/. Accessed September 25, 2024.