US stock investors will head into this week wondering if September will end as strongly as it began for the market, with manufacturing and personal income data among the top indicators on tap.
The data will be watched for further clues on whether the economic recovery is still on track and to see if the market’s recent rally has support.
Friday’s advance left the three major US stock indexes with gains for the fourth week in a row, boosting investors’ confidence that the upward move will continue.
The Standard & Poor’s 500 index is up 9.5 per cent since the end of August. Last week, its move above the 1,130 level on Monday represented a technical breakout that analysts said suggested further gains were likely.
If the rally holds, it will make September the best month for the S&P 500 since at least March 2000, and the best September for stocks since 1939.
“Sentiment has turned sharply higher over the past few weeks after very bearish readings last month,” said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.
This week’s data includes two manufacturing reports -- one from the Institute for Supply Management and another from the ISM-Chicago, better known as the Chicago Purchasing Managers Index. A Commerce Department report on personal income and spending is also due out. The last ISM manufacturing report “helped propel the markets higher,” Sheldon said, recalling the S&P 500’s gain of 3 per cent on 1 September, so “any disappointment could be a setback” for stocks.
Tepid demand amid a US unemployment rate of 9.6 per cent is expected to have caused a slowdown in manufacturing activity in September. The Institute for Supply Management’s manufacturing index probably dropped to 54.5 in September from 56.3 in August. A reading above 50 indicates expansion.
The week’s data is also expected to show moderate gains in personal income and consumer spending in August, consistent with views the economy is slowing growing.