Short On Time… Executive Summary
This is one of the most hated market rallies in some time. Everyone is waiting on a shoe to drop. You know what that means? The shoe probably doesn’t drop and the market continues climbing the wall of worry. Earnings season will be upon us starting next week and we will begin hearing how corporate America is doing. Unemployment ticked back down a little last week. That is good news. The markets will still vacillate on trade and tariffs in the very short term. However, as Fed Chairman Jerome Powell has said several times lately, the economy is doing just fine. Tune out some of the noise. Let me also caution you against investing or not investing based on political beliefs. This is a fool’s errand. The folks that do this have been proven wrong over and over and over again. It may not be smooth sailing all the time, but the overall chart of the S&P 500 starts in the lower left and continues working its way to the upper right.
The Week On Wall Street
Trade developments and continued momentum pushed all three major averages to modest gains again for a shortened holiday trading week. The Standard & Poor’s 500 Index rose 1.72 percent, while the Nasdaq Composite Index added 1.62 percent. The Dow Jones Industrial Average advanced 2.30 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 0.19 percent for the week through Thursday.
Stocks Gain on Trade Developments
Stocks continued their momentum from the prior week's records following Canada's rescinding of its digital services tax, rising on optimism as investors waited for more news on trade. The S&P 500 and Nasdaq took a breather on July’s first trading day, while the Dow Industrials posted a modest gain. Then, stocks rallied after the news of the trade deal with Vietnam, moving past the latest ADP employment report, which showed reduced jobs last month for the first time in two years. In a quick retort to the ADP report, a better-than-expected June jobs report from the Bureau of Labor Statistics gave stocks another boost, reassuring investors that the U.S. economy was weathering trade and geopolitical shocks. The S&P and Dow hit record highs as the short trading week ended.
Jobs Report Mostly Positive
The labor report for June had a few points for investors to cheer. First, employers added 147,000 jobs in June—that was 37,000 higher than economists were expecting. Unemployment ticked down to 4.1 percent from 4.2 percent. Previously reported job gains from April and May were revised upward by 16,000. Still, companies are in a “no hire, no fire” mode as they wait to see how trade policy impacts the economy. Caveats to the headline numbers: most gains were seen in government and healthcare. Several other sectors, including manufacturing and professional services, were flat or diminished.
The takeaway: good news overall, but uncertainty still lingers beneath the employment surface.
This Week: Key Economic Data
Tuesday: NFIB Small Business Optimism Index. Consumer Credit.
Wednesday: Wholesale Inventories. 10-Year Treasury Note Auction. June Fed Meeting Minutes.
Thursday: Weekly Jobless Claims. St. Louis Fed President Alberto Musalem and San Francisco Fed President Mary Daly speak.
Friday: Federal Budget.
This Week: Companies Reporting Earnings
No major companies reporting this week.
Stay tuned...
