The final full week of July was another interesting one, although scheduled news releases was limited. A massive trade deal with Japan as well as continuing his feud with Jerome Powell gave market participants something to follow this week.
Thursday saw the release of the weekly unemployment claims. Over the past seven days, there were 217,000 claims for unemployment benefits compared to an expected 221,000.
Also on Thursday, the Flash Services PMI came in at 55.2, which was higher than the projected 53 and exceeded last month’s 52.9. The Manufacturing PMI came in at 49.5, which was lower than the projected 52.7 and was lower than last month’s figure of 52.9. Ultimately, this shows the manufacturing sector is still stuck in a rut while demand for services continues to grow.
Perhaps the biggest piece of news was the announcement of a long-awaited trade deal between the United States and Japan. While the terms vary, it’s believed that Japan will face a tariff rate of 15 percent on most items with the main exception being vehicles. President Trump stated the country will also invest $550 billion into the United States. However, Japan has said that they agreed to invest $400 billion and will go as high as $550 billion.
This coming Friday paused tariffs are set to go into effect. All nations will pay at least 10 percent with others paying additional levies of up to 50 percent. Although Trump said there will be no additional delays, it’s unclear whether that statement holds up over time. Most on Wall Street believe that tariffs won’t cause a significant amount of inflation and that their long-term impacts have already been priced into the market.
It also appears Jerome Powell is staying on as Fed Chair until his term ends in May. It was Trump himself who appointed Powell in 2017, but he has been at odds with him over interest rate policies. It’s been speculated that making a change at the top of the Fed before May could cause significant market turmoil.
The S&P 500 finished the week up 1.29 percent to close at 6,388, which is an all-time high for the index. It made its low of the week on Tuesday morning when it dipped to 6,295. It would then reverse and continue to climb over the next several days before hitting a high of 6,393 on Friday.
The Dow finished the week higher by 1.13 percent to close at 44,901 at the end of trading Friday. For the week, the market dipped as low as 44,346 on Monday and peaked at 44,970 on Wednesday.
The Nasdaq closed the week .74 percent higher to close at 21,108. The index followed a similar path to the S&P making its low of the week on Tuesday before reversing and closing near its high over the past five trading days. Tuesday saw the market dip to 20,795 while the high of 21,153 came on Friday morning.
The upcoming has several important news events on the calendar. Wednesday will be an especially hectic one for traders as the ADP nonfarm payroll report comes out in the morning. That afternoon, the Fed makes its July rate decision. Advance GDP figures will also be released on Wednesday. The Core PCE Price Index is scheduled to be released on Thursday. On Friday, the Bureau of Labor Statistics (BLS) unveils its own version of the June nonfarm payroll report.