The Week On Wall Street
Stocks posted gains for the week to close out a stellar month, aided by positive economic data and reports that all major banks had passed the Federal Reserve’s annual stress test. The Dow Jones Industrial Average gained 2.02%, while the Standard & Poor’s 500 rose 2.35%. The Nasdaq Composite index added 2.19%. The MSCI EAFE index, which tracks developed overseas stock markets, increased by 0.76%.
Stocks Climb as Recession Fears Ease
Investors shrugged off weekend news of a short-lived insurrection in Russia and calls later in the week for more restrictive monetary policies from global central bankers. What powered early-week gains? New home sales, durable goods orders, and a rise in consumer confidence proved influential. More so were Thursday’s reports of a drop in initial jobless claims and an upward revision in first quarter Gross Domestic Product growth, which helped allay recession fears. The results of the Fed’s annual bank stress tests, which all major banks passed–further emboldened investors. Stock prices rallied Friday following an encouraging inflation report, capping the end to a solid week, month, and first half.
Global Central Bankers Meet
At last week’s European Central Bank Forum, central-bank governors from around the world gathered to discuss their monetary outlook and the policies needed to manage inflation amid unexpected economic strength. Fed Chair Powell reiterated that more rate hikes were coming owing to a robust labor market. He added that he wouldn’t dismiss the idea of hiking rates at consecutive Federal Open Market Committee (FOMC) meetings. While saying there is a possibility of an economic downturn, Powell didn’t believe it was the most likely case. Meanwhile, bankers from the European Central Bank and the U.K. echoed Powell’s comments, declaring that further rate hikes are needed to tame their still-elevated inflation rates.
This Week: Key Economic Data
Monday: Purchasing Managers’ Index (PMI) Manufacturing. Institute for Supply Management (ISM) Manufacturing Index.
Wednesday: Factory Orders. FOMC Minutes.
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Institute for Supply Management (ISM) Services Index. Purchasing Managers’ Index (PMI) Composite. Job Openings and Turnover Survey (JOLTS).
Friday: Employment Situation.
This Week: Notable Companies Reporting Earnings
Thursday: Seven and I Holdings Co., Inc. (SVNDY), Levi Strauss & Co. (LEVI)
The market continues to rally in the face of pessimism. Climbing the proverbial wall of worry. There are several forecasts for stocks to do well the remainder of the year and finish strong. We will go in to more detail in our 3rd Quarter Update, which will be going out soon. I would expect some seasonal volatility August through October, but barring a black swan event, inflation is cooling and unemployment is still low. When people have jobs they tend to spend money and that is what drives the economy.
THIS WEEK'S UPDATE
The Week On Wall Street