Light at the end of the tunnel? | July 7, 2023

AUTHOR: Jason Roque, CFP®, APMA®, AWMA®
TITLE:   Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ,

Will a short-trading week in the markets shine light on the 2nd half of 2023 or are we still in the dark?

Monday  S&P 500 0.12% | NASDAQ 0.21%

Markets posted modest gains in a shortened pre-July 4th trading session. Headlines continued in the EV space with Tesla rising nearly 7% on the day following news of upbeat 2nd quarter deliveries. Construction spending for May was also noteworthy as month over month spending saw its biggest increase since January 2022.

Tuesday  S&P 500 % | NASDAQ %

Markets Closed – Happy Independence Day!

Wednesday  S&P 500 .20% | NASDAQ .18%

Markets sought direction after the Holiday, but attention was paid to the release of the Federal Reserve’s June meeting minutes. Committee members agreed that pausing the rate hike in June was warranted but more hikes should be expected by year-end. U.S Factory orders declined again in the month of May, perhaps pointing towards a slowing economy going into the second half of the year.

Thursday                       S&P 500 .79% | NASDAQ .82%

Markets fell right out of the gates on Thursday as ADP Nonfarm jobs added (Jun) totaled 497k compared to much lower forecasts of only 228k. Although job growth is usually celebrated, this indicator challenges the Federal Reserve’s efforts to tamp down inflation. More spending equals more inflationary issues down the road and that is what the Fed is seeking to avoid.  

Friday                        S&P 500 .29% | NASDAQ .13%

Jobs were again the focus to close out the trading week. The U.S. Non-farm Payroll data came out on the heels of ADP’s figures the day prior. Fewer jobs were added in June than expected but remain at a high level given that Fed’s goal to suppress consumer spending. The unemployment rate fell to 3.6%.

Conclusion                   S&P 500 1.16% | NASDAQ .91%

While market trading was notably muted during the week due to the Holiday, there was important data released that provided more direction of monetary policy (ie. Further interest rate increases) for the balance of 2023. Markets are factoring additional rate hikes before year-end as the Federal Reserve Board (FRB) continues its focus on bringing down inflation. Jobs reports this week indicated that the labor market continues to be tight. Total job openings (JOLTS) in May totaled 9.8 million with businesses asking for more workers in a service driven economy. Next week could shed some light on progress towards getting prices to a normal level with the release of June’s Consumer Price Index (CPI).

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