Last week Wall Street indexes saw a broad rally on Friday, with the S&P 500 rising 0.6%, the NASDAQ Composite gaining 0.4%, and the Dow Jones Industrial Average climbing 0.7%. This positive momentum was fueled by the core PCE price index data for August, which showed a 0.2% monthly and 2.9% annual increase, both in line with expectations. The stable inflation reading solidified investor bets on future Federal Reserve easing, with markets now pricing in a 90.8%probability of a rate cut in October and a 63.8% chance for an additional cut in December. Although the annual inflation rate remains above the Fed's 2% target, the data was seen as constructive because it suggested that factors like trade tariffs had not caused an unexpected price spike, giving policymakers more room to proceed with their anticipated rate reductions. However, despite Friday's strong finish, it wasn't enough to turn the tide for the week, as all three major indexes ended with losses. The weekly downturn was primarily caused by an earlier sell-off in technology stocks, which had pulled the markets down from their recent record highs.
The digital asset market concluded a challenging week with significant losses, led by its flagship asset, Bitcoin (BTC). The leading coin accumulated a weekly loss of approximately 0.9%, as a potent risk-off sentiment early in the week drove its price down below key support levels. This downward pressure reflected broader market anxiety over persistent inflation and the potential for a hawkish Federal Reserve. While Friday's favorable PCE inflation data from the U.S. sparked a brief relief rally across markets, lifting BTC from its weekly lows, the optimism wasn't potent enough to reverse the downward trajectory. As a result, Bitcoin is currently trading in a tight consolidation range between $110,000 and $112,000. This positions the asset at a critical juncture, with traders now closely watching if this level can form a new base of support or if it's merely a pause before another potential move lower.
In lockstep with Bitcoin and the wider financial markets, Ethereum (ETH) also navigated a turbulent week, ending with substantial losses. The leading smart contract platform saw its value decrease by approximately 1.7% over the seven-day period. The sell-off was triggered by the same risk-off sentiment that swept through markets early in the week, pushing ETH decisively below its prior support level of around $4,400. As the foundational layer for much of the DeFi and NFT ecosystems, Ethereum is particularly sensitive to shifts in investor risk appetite, often behaving like a high-growth technology stock during periods of macroeconomic uncertainty. While Friday’s encouraging inflation report provided a momentary reprieve and helped it bounce from the weekly lows, the buying pressure was insufficient to reclaim the lost ground. Consequently, Ethereum is now consolidating in a narrow range, being traded at approximately $4,100. This level now serves as a critical battleground, with participants closely monitoring for signs of stabilization and watching the ETH/BTC ratio for clues about its relative strength.
Looking ahead to the first week of October, market participants will be laser-focused on a fresh batch of critical economic data that could sway the Federal Reserve's next move. The main event will undoubtedly be the U.S. Non-Farm Payrolls (NFP) report for September, due out on Friday,3rd. After last week's inflation data met expectations, investors will scrutinize the jobs report for any signs of a cooling labor market, which would reinforce the case for the Fed to proceed with its anticipated interest rate cuts in October and December. A stronger-than-expected report could, however, reignite inflation fears and complicate the Fed's easing path.
Beyond the headline jobs number, global manufacturing health will be in the spotlight with the release of the final S&P Global Manufacturing PMI figures from the U.S. and the Eurozone, as well as China's Caixin Manufacturing PMI. These reports will provide a timely snapshot of industrial activity and supply chain conditions. Additionally, several speeches from Federal Reserve and ECB officials are scheduled throughout the week, and their comments will be parsed for any subtle shifts in tone regarding future monetary policy.