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.
Markets were slayed this last week. Everyone is feeling the pain, but why are we actually all alone?
Monday S&P 500 2.14% | NASDAQ 2.55%
As is often the case, markets opened the week as they had ended the prior week. Equities sold hard as the reality of a more aggressive Federal Reserve Bank (FRB) than recently expected becomes more obvious. The CBOE VIX (Measure of volatility) rose to 23.84, just above its long-term average.
Tuesday S&P 500 0.22% | NASDAQ 0.00%
Markets appeared flat on the day, however tech and consumer stocks performed well. Meanwhile, the rest of the market was soft.
Wednesday S&P 500 0.29% | NASDAQ 0.41%
Wednesday marked six months since Russia invaded Ukraine. Markets increased marginally on the day. Technology stocks led, which signals a more dovish expectation for the FRB. That will be made clearer after Friday’s Jackson Hole speech.
Thursday S&P 500 1.41% | NASDAQ 1.67%
Markets were in the green from go as GDP was revised up to -0.6%. Additionally, Core Personal Consumption Expenditures (PCE) are projected to fall to 4.4% from 4.8% tomorrow. PCE is the FRB’s preferred measure of inflation. The weaker inflation expectations with a better preforming economy provided a bump to equities on the day.
Friday S&P 500 3.37% | NASDAQ 3.94%
Core PCE fell to 4.6% and headline PCE fell to 6.3% (from 6.8%). Additionally, future inflation expectations have come down and consumer sentiment rose! However, markets did not rise. The FRB speech in Jackson Hole delivered a message that in fact rocked markets. They essentially said that rates will have to hold at a higher level for a longer period of time.
Conclusion S&P 500 4.04% | NASDAQ 4.44%
The FRB message indicates that a recession may not bring them to cut rates. Unemployment will have to rise meaningfully for them to feel that inflation will not resurge. A ‘meaningful’ rise in unemployment would likely be an amount that would occur well into a recession. At some point after that they will likely have to cut rates and restimulate the economy… Ultimately what this tells us is that we are on our own folks!
~ 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.