The S&P 500 Index closed 3.2 percent above its August low on Friday and 3.6 percent away from the 2000-point level, an important point for technical traders. Falling commodity prices have worked in favor of the bears today. Copper is headed for a test of its lows and stock of commodities giant, Glencore, is down nearly 25 percent in Monday trading. Shares of the firm have declined about 75 percent since May as investors question Glencore's ability to repay its debt.
It will be an important week for economic data. This morning the government reported a rise in personal income by 0.3 percent in August, a healthy pace that will shift investor expectations back towards a rate hike. Consumer price inflation was low at 0.3 percent, but core inflation is up 1.3 percent over last year. Given what's happened in the oil market, that core inflation number should raise concerns for some of the inflation hawks at the Federal Reserve.
Manufacturing PMI numbers will be out later this week, with China's being closely watched. Last week the flash PMI for China showed the manufacturing sector at its weakest since the financial crisis. Domestically, construction spending for August and motor vehicle sales are scheduled to be released on Thursday. On Friday the unemployment rate for September will be announced.
We're still several weeks away from the kickoff of earnings season, but a few firms will report over the coming days. Costco (NASDAQ:COST) is the headliner, along with Paychex (NASDAQ:PAYX) and Micron Technology (NASDAQ:MU). Consumer stocks have been doing well in recent weeks and Friday's earnings beat by Nike (NYSE:NKE) gave the sector another reason to be optimistic. We'll see if Costco can continue the trend.
Shares of Micron Technology have tumbled continuously in 2015, losing about 60 percent from their December 2014 high. The semiconductor sector has been losing ground since peaking in June. The Philadelphia Stock Exchange's Semiconductor Index, known as the SOX, is down 20 percent since then. The technology sector lost momentum in recent weeks due in large part to weakness in this sub-sector. Industry giant Intel (NASDAQ:INTC) had been holding steady since July, but Qualcomm (NASDAQ:QCOM) is trading at a new 52-week low on today.
The currency market, specifically the U.S. dollar and emerging market currencies, demands the spotlight this week. The U.S. Dollar Index is off its highs this year, but the index is heavily weighted towards the euro. Trade weighted U.S. dollar indexes and those with bearish exposure to emerging market currencies are trading at or near record highs. WisdomTree Bloomberg U.S. Dollar Bullish (NYSEARCA:USDU) is 1 percent away from its 2015 high. It has been hovering near these levels for several months and a move to the upside would be a significant bullish breakout.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.