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THIS WEEK'S UPDATE

| July 06, 2021
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THE WEEK ON WALL STREET

Strong employment reports and rising consumer sent the stock market

broadly higher last week.  The Dow Jones Industrial Average rose 1.02%, while the

Standard and Poor's 500 picked up 1.67%.   The Nasdaq Composite index gained 1.94%.

The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.42%.


STOCKS RALLY

Rising conviction in the economic recovery and waning inflation worries drove stock 

prices higher, with the S&P 500 and Nasdaq Composite racing to record closes to 

begin the week.  Amid the week-long march higher, market leadership changed 

hands throughout the five-trading days.  The leadership baton alternated between

the technology and high-growth companies, which responded to lower bond yields,

and cyclical stocks, which rallied on higher oil prices and successful bank stress

tests.  Economic news buoyed investor sentiment as consumer confidence rose and 

an improving labor market-weekly initial jobless claims came in at a pandemic-era

low  (364,000), while employers added 850,000 new jobs in June-sent the S&P 500

and Nasdaq Composite to new record highs to close out the week.


A CONFIDENT CONSUMER

Market sentiment was lifted by a rise in The Conference Board's Consumer Confidence

Index, which reached its highest level since the onset of the pandemic in March 2020.

This was the fourth-straight month of increases in consumer-confidence levels. 

The consumer outlook for income, business, and labor market conditions over the 

short-term improved markedly.  Interestingly, consumer confidence and buying 

intentions appear largely unaffected by the possibility of rising inflation.  In fact,

the survey showed a rise in the number of consumers expecting to purchase homes,

automobiles, or home appliances.  Vacation intentions also rose


THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: ISM (Institute of Supply Management) Services Index.

Wednesday:  JOLTS (Job Openings and Labor Turnover Survey) Report. FOMC

(Federal Open Market Committee) minutes.

Thursday: Jobless Claims.


FINAL THOUGHTS

The Fed minutes being released this week will probably be over-discussed by the

talking heads.  We know inflation has picked up.  How could it not?  I'd really worry

if the economy was improving, and prices were not increasing.  Earnings season will

swing into action in the next few weeks and the real tell will be corporate profitability

and forecasted earnings going forward.  Everyone thinks there is a bubble, so there

probably isn't at the moment.  Sure, we are bound to see some volatility as markets 

digest news, but it is not our goal nor our intention to try and guess or worry about

the next 5% move in the market.  We focus on the intermediate to longer term.

From where I sit, people are out spending.  Spending drives the economy.  There 

are help wanted signs everywhere.  Need I say more?  Yes, at some point the economy

will slow and we will see a larger "correction", we always do.  However, as long as the

Fed still has their food on the gas, and they do, the markets and economy will 

continue to grind higher in spite of the occasional pull back.


Have a great week!


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