Economic Data Takes Pressure Off Fed For Another Rate Hike, SEC Loses Court Fight Over Bitcoin ETF, Cannabis Stocks Rally With Drug’s DEA Classification Under Review: The Week In The Markets

Only 7% of traders are anticipating an interest rate hike at the Federal Reserve’s September meeting in the wake of inflation data this week that met economist expectations and an August jobs report that reflects a growing equilibrium of supply and demand in the labor market. 

The Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, increased 3.3% year-on-year in July and matched economist projections Thursday. The August jobs report released Friday shows nonfarm payroll growth of 187,000 jobs, topping projections of 170,000. At the same time, unemployment ticked higher from 3.5% to 3.8% in August and job openings fell to 8.8 million. 

Ninety-three percent of investors are expecting the Fed to hold steady on interest rates in September and 59.1% expect rates to stay the same in November as of midday Friday, according to CME Group’s FedWatch tool. 

Appeals Court Overturns SEC Rejection Of Bitcoin ETF: A federal appeals court vacated the Securities and Exchange Commission’s rejection of an application by Grayscale Investments to convert its Grayscale Bitcoin Trust GBTC into a spot ETF on Tuesday, ordering a new review of the application. Grayscale first applied for the ETF conversion, which would simplify and mainstream Bitcoin BTC/USD investing, in October 2021. 

Grayscale is one of many institutions — including BlackRock, Fidelity, WisdomTree, VanEck, Bitwise and Invesco — that has applied for a Bitcoin ETF. The court order sent Bitcoin rocketing higher. On Thursday, the SEC postponed its decision on Bitcoin ETF applications from a handful of companies into October. 

Federal Agency Recommends Cannabis Rescheduling: On Tuesday, the Department of Health and Human Services sent a recommendation to the Drug Enforcement Administration suggesting that cannabis be moved from its current Schedule I drug classification, which groups it with substances like heroin deemed to have no medical benefit, to a Schedule III drug, the same class as ketamine.

The landmark recommendation sent cannabis stocks soaring higher on the possibility of relaxed federal marijuana regulations. The AdvisorShares Pure US Cannabis ETF MSOS was the top-performing ETF in August coming off the regulatory news, gaining more than 20%. 

What To Watch In The Week Ahead: The markets will be closed Monday, Sept. 4 for Labor Day. In the holiday-shortened trading week, investors will be watching for the release of the Fed’s Beige Book on Wednesday on the economic front. 

As the second-quarter earnings season winds down, artificial intelligence stock C3.ai Inc AI is expected to report Wednesday, along with retail trader favorite GameStop Corp GME. Docusign Inc DOCU is set to report earnings Thursday, and grocer Kroger Co KR reports Friday.