There was an onslaught of data last week, which led to gains. Should more be expected with the coming earnings season?
Monday S&P 500 0.27%| NASDAQ 1.09%
ISM Manufacturing unexpectedly slipped and remains in contractionary territory. The weaker economic data would typically signal lower rates as rate cut expectations would increase. To the contrary, 10-year treasuries rose on the day. In the face of weak economic data, the start of the quarter brought optimism towards the next three months.
Tuesday S&P 500 0.62% | NASDAQ .84%
JOLTs job openings rose more than expected to 8.14M openings. For perspective, there were 6.6M unemployed as of the May report. The strong jobs data did not deter markets, though; this may be because the Federal Reserve Board (FRB) Chair, J. Powell, spoke on the day. He indicated that progress is being made towards their inflation target. This is the ‘secret sauce’ needed to justify future rate cuts.
Wednesday S&P 500 0.51% | NASDAQ 0.88%
Initial jobless claims rose for the week to 238K from 234K; the level remains elevated, albeit from all-time lows. Factory orders unexpectedly slipped into the negative on the month. Additionally, ISM Services unexpectedly slipped into contractionary territory. This is all bad news for economic production, so why did the markets rise? Interest rates fell as this data increases the likelihood that the FRB will lower rates sooner than expected. The heightened odds are now calling for a .25% cut in September and December, according to CME FedWatch.
Thursday S&P 500 -% | NASDAQ -%
Happy Independence Day!
Friday S&P 500 0.54% | NASDAQ 0.90%
Happy Jobs Friday! The unemployment rate rose to 4.1%, Nonfarm payrolls beat expectations, and participation rose to 62.6% from 62.5%, all for June. The unemployment rate went up even though we added 206K jobs??? Participation went up so, with more people in the market, the rate can go up even as jobs are added. This is a positive signal that workers are returning to the work force. The rise on equity markets, however, was on hopes that economic weakness would be enough for an FRB rate cut.
Conclusion S&P 500 1.95% | NASDAQ 3.55%
This was a busy week for economic data, especially for a holiday shortened week. We got weaker Jobs, manufacturing, Services, and Factory orders. The weakness led to stronger markets on hopes the FRB will cut rates BEFORE a recession can materialize. The coming week starts second quarter earnings. Valuations are stretched (S&P 500 P/E: 28.94) and economic production is weak, very little should be expected from this season. This could be the start of volatility that would lead into the Autumn.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.
It was a quiet week for markets. Is this just the calm before the storm, or should we expect this to continue?
Monday
Markets were little changed on Monday. Literally the S&P 500 fell 0.05 points on the day. Oil occupied attention on the day as OPEC+ did not agree to increase production. This will likely leave us with elevated fuel prices for some time. In response, the US is considering releasing some strategic reserves to ease prices slightly, but no action was taken.
Tuesday
Retail sales dominated focus on Tuesday as they jumped a surprising 1.7% in October. This led to a buy sentiment among investors as the S&P 500 gained 0.38% on the day. This was either a sign of things to come or people getting ahead of anticipated inventory shortages this holiday season. To be determined…
Wednesday
Inflation concerns were stoked on Wednesday as oil inventories shrank when they were expected to expand. The S&P 500 contracted 0.26% on the day as those fears were in focus.
Thursday
All that was lost on Wednesday was recaptured on Thursday. Jobs data released showed that once again the pandemic job market is improving. Initial jobless claims fell to 268K, the lowest since the start of the pandemic. More importantly, on-going claims have fallen to 2.080M, again another low. The pre-pandemic level was roughly 1.7M.
Friday
COVID closures dominated the headlines and the market on Friday. With no economic data reporting on Friday, the focus was squarely on Austria. COVID closures may become more prevalent in coming weeks as colder weather sets in on Europe. Markets slipped, but not hard. The S&P 500 dropped 0.13% on the day.
Conclusion
The S&P 500 gained 0.32% on the week. Not a particularly interesting week, however, expect the volume on trading to ratchet up after the upcoming holiday. The debt ceiling still needs resolving by December 3rd. Unfortunately, rather than being resolved in the 11th hour, this may push out days passed that deadline. The treasury projects that they have the funds to keep the lights on till 12-15-21. We may see political wrangling until closer to that date. That wrangling will likely cause market volatility.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.