The Strength of the Market is: Strong

Stocks had a tough week. Last week, the Dow Jones index plunged 1,100 points in a single day and completed its longest losing streak since 1974. At the end of the week, cooler-than-expected inflation data helped the stock market rebound some of its losses. Last Wednesday, the Federal Reserve said it would dial back future interest rate cuts in part because of stubborn inflation. The Federal Reserve appears to be in a cautious stance and is still trying to get inflation down to 2.0%. The three major stock indexes all booked losses last week - the Dow Jones lost nearly 2.3%, notching its third straight losing week, the S&P 500 fell almost 2%, while the Nasdaq Composite was off by about 1.8%. In addition, a Trump-endorsed House Republican measure to fund the government for three months failed. Although, a government funding bill was passed by Congress and signed into law by President Joe Biden on Saturday, which formally averted a government shutdown crisis.

Economic reports from last week came back mixed:

•Manufacturing (New York) - lower than expectation

•Manufacturing (Philadelphia) - lower than expectation

•Retail Sales - higher than expectation

•New Residential Construction - lower than expectation

•Existing Home Sales - higher than expectation

•Gross Domestic Product - higher than expectation

•Consumer Sentiment - in-line with expectation

•Personal Income - lower than expectation

•Jobless Claims - lower than expectation

In a holiday-shortened week, investors will look for guidance from economic reports like National Economic Activity, Consumer Confidence, Manufacturing, Housing and Jobless Claims.