Last Week’s Summary
- S&P 500 Index rose 2.36%
- International Equities rose 1.33%
- Emerging Markets fell 0.04%
- U.S. 10-Year Treasury Yield fell to 3.84%
- Initial Jobless Claims fell to 239k
- PCE fell to 3.8%; Core fell to 4.6%
- U. of Mich. Sentiment rose to 64.4
What to Watch for This Week
- M, 7/3/23 S&P Global US Manufacturing PMI
- T, 7/4/23 U.S. Markets will be closed in observance of Independence Day
- W, 7/5/23 Durable Goods Orders, FOMC Meeting Minutes
- Th, 7/6/23 MBA Mortgage Applications, Initial Jobless Claims, ADP Employment Change
- F, 7/7/23 Unemployment Rate, Nonfarm Payrolls
Weekly Market Recap
As the second quarter of the year came to a close, the stock market continued its upward trend, fueled by the dominance of the technology sector and the rise of artificial intelligence. The Nasdaq 100 Index, which is heavily influenced by tech stocks, achieved its strongest performance in the first half of the year since its inception. Additionally, major banks experienced their first monthly gain since January after successfully passing the Federal Reserve’s stress test, which determines the banks’ capital requirements and their ability to distribute capital to shareholders through share buybacks and dividends.
However, despite the impressive performance of the technology sector, there are indications of a slowdown in the overall economy. Key measures of inflation in the United States showed a cooling trend in May, and consumer spending remained stagnant, suggesting that the primary driving force of the economy may be losing momentum.
The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures Price Index, only rose by 0.1% and showed a decrease of 3.8% compared to the same period last year, marking the smallest annual increase in over two years. This indicates that the Federal Reserve’s policies are having an impact.
With the markets having a shortened week due to the holidays, traders are eagerly awaiting the release of the Federal Open Market Committee’s meeting minutes and June’s jobs report. These reports will provide insights into whether the Federal Reserve will resume its rate-hiking cycle or maintain the current pause that was initiated during the previous month’s meeting.
