Among the numerous entries on this week’s densely populated economic schedule, the July Personal Consumption Expenditures (PCE) index and the August jobs report stand out as two crucial data markers.
Stocks concluded higher on Monday, with investors largely shrugging off concerns about the potential for increased interest rates.
Last Friday, Federal Reserve Chair Jerome Powell emphasized during his speech at the Jackson Hole event that the central bank is fully prepared to take necessary measures to curb inflation, even if that entails implementing additional rate hikes. Powell reiterated the Fed’s commitment to making decisions based on incoming data, heightening the significance of this week’s critical economic reports.
Although the main indexes experienced a somewhat turbulent trading session, all three managed to maintain positive ground throughout the day. By the closing bell, the Nasdaq Composite had surged by 0.8% to reach 13,705, the S&P 500 had registered a 0.6% increase, closing at 4,433, and the Dow Jones Industrial Average had advanced by 0.6%, settling at 34,559.
The abundance of economic reports scheduled for this week holds the potential to trigger fluctuations in the stock market leading up to the extended holiday weekend. The Federal Reserve’s keen attention to these reports adds to their significance. (Remember, the stock market will be closed next Monday, September 4, in observance of Labor Day.) Among the highly anticipated data releases, the July Personal Consumption Expenditures (PCE) index – the Federal Reserve’s preferred measure of inflation – is set to be unveiled ahead of Thursday’s opening bell. Additionally, the August jobs report, scheduled for release on Friday morning, stands out as another pivotal data point.
“Federal Reserve Chair Jerome Powell has solidified the prospect of further interest rate hikes, given that inflation remains elevated above the targeted 2%, and the central bank is resolute in its commitment to achieving that target,” explains Rod von Lipsey, the Managing Director at UBS Private Wealth Management. He adds, “This week’s core PCE statistics and the forthcoming Consumer Price Index (CPI) report in mid-September will hold extra significance in shaping expectations for the Federal Reserve’s potential actions at its late September meeting.”
Hawaiian Electric stock jumps after disputing wildfire claims
In the realm of individual stock developments, Hawaiian Electric Industries (HE) shares experienced a remarkable surge of nearly 45% today. This substantial increase came about following the utility company’s rebuttal of claims suggesting that the early August Lahaina wildfire, which resulted in the tragic loss of over 100 lives and the scorching of more than 3,000 acres, was caused by faulty power lines. In response, Maui County initiated legal action against Hawaiian Electric last Thursday, asserting claims of negligence on the utility company’s part.
“We were taken aback and disheartened by the County of Maui’s swift recourse to litigation, especially before completing its own investigation,” commented Shelee Kimura, the President and CEO of Hawaiian Electric, as stated in the company’s official press release. Kimura continued, “We firmly believe that the complaint lacks factual and legal soundness.” Despite this recent surge, the utility company’s stock has still recorded a significant drop of nearly 64% for the month so far.
3M pops on earplug settlement reports
In a separate development, the shares of 3M (MMM) experienced a notable increase of 5.2%. This uptick followed a report in The Wall Street Journal that indicated the industrial conglomerate was in the final stages of reaching a resolution regarding its faulty earplugs issue. These earplugs, produced by 3M and its subsidiary Aearo Technologies, led to more than 300,000 lawsuits filed by veterans who alleged that the products failed to adequately protect them from hearing damage.
As outlined by the WSJ, the proposed settlement would require 3M to make a payment of $5.5 billion. This figure stands significantly lower than the $10 billion to $15 billion in damages that some analysts had anticipated.
“We see the impending settlement as a positive outcome for MMM, as it mitigates the substantial legal risks faced by the company,” stated Jonathan Sakraida, an analyst at CFRA Research. Despite this development, the analyst retained a Hold rating for the Dow Jones stock. He noted, “We do acknowledge, however, that MMM’s various lines of business have experienced declining sales over several quarters.”