Market Perspective for July 5, 2023

The final full week of June provided investors with a slew of information to help them discern where the market may be heading over the coming weeks and months. On Tuesday, it was revealed that there was a .6 percent increase in monthly core durable goods orders compared to an estimate of flat growth since May’s report was released. Furthermore, core durable goods orders over that same period were up 1.7 percent, which was significantly higher than the .8 percent decline forecast by market experts.

The Conference Board also issued its consumer confidence index on Tuesday morning, and the final figure was 109.7, which was an increase from 102.5 in May. Finally, investors found out on Tuesday that new home sales had increased to 763,000 compared to 680,000 last month. This may suggest that home prices will remain steady or continue to climb during the summer, which could be both good and bad for the economy. On the plus side, additional home sales are likely a sign of economic strength, but that strength may force the Fed to increase interest rates again.

On Wednesday, Fed Chairman Jerome Powell indicated during a panel event that multiple hikes may be on the table this year. The Federal Reserve is scheduled to meet on July 26, and even if a hike doesn’t occur, Powell said that rates haven’t been restrictive for long enough to think about rate cuts.

Thursday morning saw the release of gross domestic product (GDP) data, which was better than expected. During the second quarter, it was believed that the economy grew by 1.4 percent, but the Thursday report showed that growth was actually 2 percent during that period. The GDP price index report showed an annualized increase of 4.1 percent during the second quarter. Ultimately, this means that the cost of goods and services that are included when calculating GDP figures increased.

Unemployment data for the past week was also revealed on Thursday, and over the past seven days, 239,000 filed for benefits, which was lower than the 265,000 filed last week. It was also lower than the estimate of 264,000 claims.

Two more news reports were released on Friday that did little to clear a muddled economic picture. The PCE core price index found that prices increased .3 percent over the past month, which was unchanged from the month prior and slightly lower than analyst expectations. Revised University of Michigan consumer sentiment found that consumers were slightly more hopeful about the future as the figure for June was 64.4 instead of the original figure of 63.9. However, revised consumer inflation expectations found that Americans expected inflation to be at 3.3 percent within a year as opposed to the 3.1 percent figure that was released earlier in June.

Equity markets largely trended higher throughout the week as the Dow 30 finished up 1.9 percent to finish at 34,407. The Dow started the week at 33,791 before hitting its weekly low of 33,668 on Monday morning. From there, it was a steady climb to the high as positive economic news had investors clamoring to put their money into companies represented on the index.

The Nasdaq was up a little over 2 percent for the week after ending Friday’s session at 13,787. As with the Dow, the Nasdaq hit its weekly low on Monday before generally grinding higher the rest of the week.

Finally, the S&P 500 was up 2.22 percent to finish the week at 4,450. As with the other major American indices, it would find support for the week on Monday afternoon at 4,329.

This upcoming week is expected to be backloaded due to the Fourth of July holiday. On Wednesday, the Federal Open Market Committee (FOMC) minutes will be released while job openings and wage data will be released on Thursday and Friday.

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