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 were lower for the holiday shortened week. Did the daily moves tell us anything about the next month?
Monday S&P 500 null% | NASDAQ null%
Happy Memorial Day!
Tuesday S&P 500 0.63% | NASDAQ 0.42%
On the final day of trading for May, investors decided to take markets lower. Oil was a major driver on the day. An EU oil embargo agreement made futures jump. This means more inflation, and more risk of Federal Reserve Board (FRB) rate increases.
Wednesday S&P 500 0.76% | NASDAQ 0.73%
Better economic data led to a selloff in equities. Stronger manufacturing and job opening data caused stress on the market. This is an indication that investors see the FRB being able to be more aggressive. So, once again, more good news has a bad news effect for markets.
Thursday S&P 500 1.84% | NASDAQ 2.69%
OPEC announced they will increase production at a faster pace than expected. They didn’t necessarily increase overall output production, but just when they would reach the levels previously indicated. More oil production should lead to softer prices at the pump. That gave relief to inflation concerns which moved markets broadly higher.
Friday S&P 500 1.64% | NASDAQ 2.47%
Happy Jobs Friday! Good news equals bad news once again as the Jobs report did not disappoint. An internal TESLA email was leaked, Elon Musk indicated a hiring freeze for the company due to economic uncertainty. This backs up a concern voiced by Jamie Dimon earlier in the week regarding a hurricane brewing in the near future.
Conclusion S&P 500 1.20% | NASDAQ 0.98%
After a stellar week, markets fell flat this last week. The ebbs and flows from the market were far calmer than they have been over the last two weeks. This is a big deal as data that prompted moves were no less inflammatory but yielded a calmer response. This should yield growth over the coming weeks should volatility remain at its current level.
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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.