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.
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Markets moved north last week, but what does recent history tell us we should expect in response?
Monday S&P 500 0.84% | NASDAQ 0.81%
The week opened with the S&P 500 1% in the green but faded through the afternoon hours. Apple (AAPL) announced that they will be slowing their hiring for the remainder of this year and 2023. This is a warning signal for what may be to come for other companies.
Tuesday S&P 500 2.73% | NASDAQ 3.09%
A wave of earnings released on Tuesday buoyed the markets. The NASDAQ outpaced the S&P for growth as major communications company earnings came into focus.
Wednesday S&P 500 0.59% | NASDAQ 1.58%
Growth leadership continued on Wednesday. Fears of a recession have stoked larger flames around yields not rising as far as originally thought. A recession would pressure the Federal Reserve Bank (FRB) to be more passive.
Thursday S&P 500 0.99% | NASDAQ 1.36%
Markets performed in the green for the day, however fixed income havens performed well. This is an underlying signal of conservativeness within a bear market rally. Bonds rallied on what appeared to be recession fears, while stocks performed well on second quarter earnings data.
Friday S&P 500 0.92% | NASDAQ 1.86%
Manufacturing data beat expectations, however, services data slipped into contractionary territory unexpectedly for June. Services make up the vast majority of our economy. Investors moved in a risk off manner as a result. NASDAQ stocks, which led the way throughout the week, led the march lower.
Conclusion S&P 500 2.55% | NASDAQ 3.33%
Friday’s negativity was not enough to dampen all the growth from the week. The NASDAQ led the way, rising more than 3%. This has now turned into a see-saw market; one week up, the next down. As of late, the downs have not been as deep. The earnings calendar is heavy this week but additionally, the Federal Reserve Board (FRB) is meeting. That will be watched closely as a 0.75% hike is expected.
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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.