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The first full trading week of August was relatively quiet in economic news.
On Tuesday, the ISM Services PMI came in at 50.1, which was lower than the expected 51.5 and was also lower than last month’s 50.8. The final figure indicates that while demand for services is growing slightly, overall demand is trending down. For the last several years, demand for services has been fueling economic growth, causing inflation to remain elevated.

If demand for services slows, it may mean that inflation finally eases back to the Fed’s target of 2 percent. This may be a justification for cutting interest rates. However, slowing demand for services may also indicate an overall slowdown in consumer spending, which could be indicative of a potential recession.
It was also revealed this week that President Trump was leaning toward appointing Christopher Waller as the new leader of the Fed after Powell’s term ends in May. While the move has not been confirmed, he has met with Trump’s team, and his philosophy does mesh well with Trump’s. Waller has been one of the loudest voices in support of rate cuts, and it’s likely that the Fed would be more aggressive in easing policy if he were to take the job.
On Thursday, unemployment claim figures for the past week came out and revealed that 226,000 people requested benefits over the past seven days. That is higher than the expected 221,000 requests as well as more than the 219,000 requests last week.

Also on Thursday, President Trump said that there would be no negotiating the 50 percent tariff imposed on India for buying Russian oil.

The S&P 500 finished the week up 1,42 percent to close at 6,389. That represents an increase of 89 points over the past five trading days for a market trending steadily upward since April. Despite losing nearly 20 percent during the month of April, the index is still up nearly 16 percent over the past 12 months. On Monday, the market opened at its weekly low of 6,279 and closed the week near its weekly high.

The Dow was also up this week, closing 0.72 percent higher over the past five days. On Friday, the index closed at 44,175, which is near all-time highs for the market. Although the Dow has lost about 1 percent this month, it has appreciated about 12 percent since this time last year. On Thursday morning, the Dow made its weekly high of 44,422 before reversing and making a weekly low of 43,820 later that day.

Finally, the Nasdaq was up 2.65 percent to finish this week at 23,611, which was an increase of 608 points over the past five trading days. The index is now up 27 percent since this time last year, which is the best of the three major American markets.

In international news, Great Britain announced on Thursday morning that it would reduce its interest rate from 4.25 percent to 4 percent. The vote was 5-4 in favor of a cut, which is a level of dissent that is rarely seen from a central bank board. On Friday, Canada announced that its unemployment rate remained steady at 6.9 percent, despite its economy losing 40,000 jobs over the past month.

The upcoming week will feature several important data points, including the release of inflation figures on Tuesday and price change information on Wednesday. Retail sales figures will be released on Friday as well as the University of Michigan’s inflation expectation and consumer sentiment reports.

The final few trading days of July were busy. Among the most consequential reports were the ADP and BLS nonfarm payroll figures in addition to the Fed’s July interest rate decision.

On Wednesday, the ADP announced that the economy added 104,000 jobs compared to an expected 77,000. In addition, the job report from June was revised to a loss of 24,000 positions. Also on Wednesday, the Fed decided to keep interest rates in a range from 4.25 percent to 4.5 percent.

Finally on Wednesday, advanced gross domestic product (GDP) figures for the past three months were released. It indicated the economy grew 3 percent during the previous quarter compared to an expected increase of 2.5 percent.

On Thursday, the Core PCE Price Index came out and revealed that prices for most goods increased by .3 percent compared to an expected .2 percent. This is the Fed’s preferred inflation gauge, and combined with July’s inflation report finding that inflation increased to 2.7 percent on an annual basis, it’s easy to see why the Fed stood pat. Unemployment claims data was also made public that day and found that 218,000 people made requests for benefits compared to an expected 222,000.

On Friday, the BLS nonfarm payroll report came out and found that 73,000 jobs were added during the month of July. This was below the 106,000 positions analysts believed had been added during that period. It’s worth noting that the June figure was revised downward to just 14,000. The BLS also revised May’s figure downward to 19,000.
The unemployment rate ticked up to 4.2 percent while monthly average hourly earnings rose by .3 percent, and each of those figures was in line with expectations. Later Friday morning, the ISM Manufacturing PMI came in at 48 compared to an expected 39.5.

At the close of trading Friday, the S&P 500 stood at 6,238, which was a loss of 155 points or 2.44 percent over the last five trading days. On Tuesday, the market made a high of 6,402 before remaining flat most of the week. However, on Friday, the index took a nosedive and made a low of 6,214.

The Dow was also off this week, closing down 2.77 percent to finish at 43,588. This was a loss of over 1,200 points for the market that made its weekly high on Monday and weekly low on Friday. The weekly high was 44,932 while the weekly low was 43,440.

Finally, the Nasdaq followed the other two major indexes lower and closed out the week at 20,650. This was a loss of 2.43 percent or 515 points for the tech-heavy market. On Thursday, the index made a high of 21,394 before reversing and making a weekly low of 20,569 on Friday.

In international news, the Bank of Canada announced that the country’s key interest rate would remain at 2.75 percent. On Thursday night, the Bank of Japan announced that the nation would also retain the status quo by keeping its interest rate at just below .50 percent.

The upcoming week will surely be another interesting one as tariffs are set to take effect for many countries. The ISM Services PMI will be released on Tuesday while unemployment claim numbers are set to be released Thursday as usual. International traders will want to keep an eye out for Great Britain’s next rate decision, which is scheduled to be released on Thursday morning.