U.S. equities maintained their upward momentum last week with support from healthy economic data and continued moderation in inflation readings. The S&P 500 and Dow Jones each gained 0.6% for the week, while the Nasdaq Composite rose 1.0%. The materials sector led the way within the S&P 500 gaining 3.4% as commodity prices bounced higher on news of aggressive stimulus announcements in China, a resource hungry economy that has been in an economic slump. China’s equity markets, which have also been in a prolonged slump, gained some reprieve as the Heng Seng index bounced 13% last week, the largest weekly gain since 2008, following the stimulus news from the Politburo.

Last week’s release of the August PCE index (Personal Consumption Expenditures), which is the Federal Reserve’s preferred inflation gauge, showed sustained progress toward the central bank’s 2% inflation target. The overall PCE annual inflation rate decelerated to just 2.2% from 2.5% in July, and core PCE inflation (excluding food and energy prices) rose just 0.1% in August, below the consensus forecast increase of 0.2% (though core PCE is still running at 2.7% year-over-year).

Despite the encouraging progress on inflation, supply chain disruptions could complicate the near-term price outlook as a port strike has begun along the east coast, in addition to the devastating effects of Hurricane Helene in the southeast. Last night roughly 45k dockworkers operating 36 East and Gulf Coast ports, which collectively account for roughly 40% of U.S. shipment volume, went on strike as union negotiations regarding pay and potential automation impacts are at an impasse. It is the first broad strike by the International Longshoreman’s Association since 1977, per FactSet. Importers have been working to blunt the impact by pulling forward imports and rerouting shipments, but an extended stoppage could still have a material impact, potentially costing the U.S. economy $5 billion per day, according to the Financial Times. This builds on a backdrop of increasingly unsettled labor and rising strike activity, including an ongoing strike at Boeing with its machinists union and a potential walk-out at carmaker Stellantis by the UAW.

On the corporate front, as the third quarter comes to a close, investors will start to shift their focus to the upcoming earnings season. According to FactSet, the consensus estimate for earnings per share growth for the S&P 500 in the third quarter is 4.6% compared to the year prior, which would be a deceleration from 11.3% EPS growth in the second quarter. The energy sector is expected to be the notable drag on results amid falling oil and gas prices, while tech, health care, and communications services lead the way on the positive side. Another item of focus among equity investors is rising anti-trust activity including last week’s announced case against payment processor Visa and their control of the U.S. debit card market by the Department of Justice, which follows a host of recent investigations including tech giants Google and Nvidia. In fact, according to Bank of America, a staggering 43% of the market capitalization of the S&P 500 is now subject to anti-trust investigation from the DOJ or FTC.

In the week ahead, investors will get an important update on the state of the labor market, including the September nonfarm payrolls report. This morning’s August JOLTS report (job openings and labor turnover survey) showed an encouraging increase in job demand as openings rose to 8,040k from 7,711k in July. However, Friday’s nonfarm payroll report is expected to show somewhat muted job gains.. The consensus economist forecast for net new nonfarm payrolls in September is 140k compared to 142k a month ago or 246k in September of last year.