Stocks Up Last Week For The Second Week In A Row

Market Moves You Need to See Stocks Up Last Week For The Second Week In A Row [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Up Last Week For The Second Week In A Row Stocks closed mostly lower on Friday with only the Dow eking out a small gain (and a new all-time high close). But all of the indexes closed solidly higher for the week, making it 2 up weeks in a row across the board. It also marks the 4th up week out of 6 weeks for the Nasdaq, small-cap Russell 2000 and the mid-cap S&P 400, and the 5th up week out of 6 for the Dow and the S&P 500. Last Wednesday's 50 basis point rate cut (which puts the Fed Funds midpoint at 4.9%), sent stocks soaring the next day, and appears to have ushered in a new phase for the market. With inflation nearing the Fed's 2% target, the Fed has confidently begun their long-awaited rate-cutting cycle. And they've signaled to the market that two more cuts are likely by year's end (presumably by 25 bps each given their 4.4% Fed Funds forecast). And then another full percentage point lower by the end of next year with their 3.4% forecast. Federal Reserve Governor Christopher Waller on Friday said, "we're at a point where the economy is strong, inflation is coming down, and we want to keep it that way." That's great news for stocks since they typically respond well when interest rates are lowered. And given the continued strength in the economy (Q2 GDP came in at 3.0%, while Q4 is estimated at 2.9%), and upward trending estimates in corporate earnings and sales (Q3'24 earnings are expected to be up 3.5%, and sales up 4.6%; Q4'24 earnings are expected to be up 10.0%, and sales up 5.3%; Q1'25 earnings are expected to be up 12.5%, and sales up 5.1%; and Q2'25 earnings are expected to be up 13.6%, and sales up 4.9%), stocks are expected to begin their next leg up as the bull market extends their rally. Add in the ongoing market rotation and breadth expansion, which is bullish for the market, and the likelihood for greater gains grows even more. Let's also not forget that we're soon entering Q4, which is considered the best quarter for stocks, not to mention another earnings season being right around the corner (stocks typically go up during earnings season). All of the above suggests the market is in a great position for a historic move up. Of course, the Fed will continue to monitor the data. Something Mr. Waller echoed. The two big pieces of upcoming data are this week's Personal Consumption Expenditures (PCE) index on Friday, 9/27. This is the Fed's preferred inflation gauge. And then next week's Employment Situation Report on Friday, 10/4. There's plenty of other economic reports on the docket in the interim, but those are the two biggies. In the meantime, we'll see if the market can build upon last week's extended rally and make it 3 up weeks in a row. As spectacular as this year has been so far, it looks like it could get even better as we head into the end of the year. See you tomorrow, [Kevin Matras - Signature] Kevin Matras Executive Vice President, Zacks Investment Research [Why Haven't You Looked at Zacks' Top Stocks?]( Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year. 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