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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The rally is over, or is it? Markets fell last week, but should we expect it to continue?
Monday S&P 500 0.40% | NASDAQ 0.62%
China lowered keys rates over night which yielded a bullish market at open. Heavy stimulus from China could signal a resurgence of activity later this year. This week will be heavy on consumer retail earnings.
Tuesday S&P 500 0.18% | NASDAQ 0.20%
Markets started the day in the red and floated into the green as the day progressed. Earnings out of Walmart beat expectations. Consumers are shifting their spend but still spending. They reported that the recent relief in fuel expenses has translated to consumer spending.
Wednesday S&P 500 0.72% | NASDAQ 1.25%
Energy prices increased on the day, raising concerns about future inflation. US exports of fuel increased last month as the US begins to replace Russian fuel supplies to Europe. Target failed to meet earnings expectations as inventories dragged on their performance. Federal Reserve Board (FRB) minutes from their last meeting were released. They showed an indication of slowing rate hikes ahead. Markets rebounded briefly on the news. Markets remained in the red throughout the day and ended there.
Thursday S&P 500 0.23% | NASDAQ 0.21%
Markets moved sideways most of the day trying to find a reason to rise. They did so in the final hour, but not by much. Short term interest rates floated down on the day and interest rate expectations softened. Oil prices firmed on the day, which will provide a contradictory opinion in coming days.
Friday S&P 500 1.29% | NASDAQ 2.01%
The equity markets retreated on Friday as anticipation builds towards the FRB’s meeting in Jackson Hole next week. As a result, the markets saw equities selloff, yields climb, a stronger dollar, and higher fuel-based commodities.
Conclusion S&P 500 1.21% | NASDAQ 2.62%
Welp, it was fun while it lasted, but the four-week rally seems to have lost steam. Markets closed the week in negative territory for the first time in five weeks. Eyes seem to be turning to Jackson Hole. The anticipation of a hawkish FRB will likely be fulfilled. As the economy continues to weaken with the current FRB activity, their resolve to stay hawkish will be tested. In the short run this could mean negativity, but in the intermediate term it should mean opportunity.
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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.