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.
Oil fell and markets fell with them. Why did the inflation maker not have a positive impact on equities?
Monday S&P 500 0.02% | NASDAQ 0.14%
Market movement was choppy all day. They ended up roughly unchanged. Investors were digesting elevated Russian activity in Ukraine and mixed earnings data. An outperformer was Bank of America as they capitalized on consumer lending, which will likely slow in the second quarter.
Tuesday S&P 500 1.61% | NASDAQ 2.15%
Stocks came out of the gates smoking hot on Tuesday. Yields were rising, which would typically signal a stronger S&P 500, but it was NASDAQ that led the way. This came as a result of weaker energy prices. That would signal weaker inflation and less impetus for rate hikes.
Wednesday S&P 500 0.06% | NASDAQ 1.22%
Markets ebbed and flowed between gains and losses throughout the day. Crude inventories fell more than expected, causing oil prices to be more volatile on the day. Earnings data performed well with the exception of United Airlines.
Thursday S&P 500 1.50% | NASDAQ 2.06%
The trading day started red hot with the S&P 500 up over 1%; however, that faded immediately. The fade came as yields pressed higher. Equities sold off as inflationary pressures lead us to persistent rate hikes likely throughout next year.
Friday S&P 500 2.77% | NASDAQ 2.55%
The selling continued into Friday. The pressure on yields continued and oil prices continued to ease. Those easing prices did nothing to buoy stocks. Oil prices struggled as a result of continued lockdowns in Shanghai. The lack of demand from that region has dampened prices.
Conclusion S&P 500 2.60% | NASDAQ 3.60%
Oil Prices have softened over the last week. On the surface, this can be seen as a positive as it would signal weaker inflationary pressures over the next several weeks (and if it persists, months). “If it persists” is the key, however. The current move in oil prices has to do with slowing demand as Shanghai remains under a COVID related lockdown. If they were to reopen soon, that demand comes back online. More concerning is the impact their closure will have on supply lines a few months from now. Our demand will deplete inventories and shelves likely will not be restocked in time for that depletion. This will further delay the softening of inflationary factor.
~ 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.