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After a weak start to September, futures are heading into the new week on a positive note. There’s a handful of important economic reports this week, including CPI (Wed), PPI (Thur), and Retail Sales (Thur), but the week will start off quietly as there are no economic or earnings reports on the calendar. One notable release today, though, will be the NY Fed’s survey of Consumer Expectations which has become a widely watched gauge for inflation expectations.
The last five trading days, which also encompass all of September, have been weak for US stocks as nine out of eleven sectors are down month to date and seven of them are down over 1%. Despite the weakness, the losses have been relatively contained as Industrials is the only sector down more than 2%. Behind Industrials, Technology, the most important sector in the market given its weighting, is down 1.63%. To the upside, the only two sectors positive this month are Utilities (+0.35%) and Energy (+3.52%). In a market environment preoccupied with inflation, it shouldn’t be a surprise that when the Energy sector rallies over 3%, the rest of the market may struggle.
Looking at the Energy sector, ever since late June, the sector ETF (XLE) has been steadily trending higher moving from oversold to overbought territory, and it is now less than 2% from its 52-week high in November and less than 10% from its all-time high in 2014.
The Industrials sector has been weak (like the rest of the market) of late, and on Friday it closed right at the lower end of a short-term trading range, but even of that level breaks, the sector ETF (XLI) is trading comfortably above the high end of its trading range from 2023.
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