Market Perspective for July 7, 2024

Even with a shortened trading week due to the Independence Day holiday, there was plenty of news released to keep investors occupied. The first major piece of news came out on Monday when the ISM Manufacturing PMI figure was released. It came in at 48.5 percent, which indicates that the manufacturing sector is in a recession. The June figure was lower than last month’s 48.7 percent as well as lower than the projected 49.2 percent.

On Tuesday, the Jobs Openings and Labor Turnover Survey (JOLTS) report was released. It found that there were 8.41 million jobs available in June, which was higher than the expected 7.96 million. It was also higher than last month’s revised total of 7.92 million.

Jerome Powell spoke on Tuesday and said that significant progress has been made on inflation. He also said that he expects the inflation rate to be around 2.5 percent this time next year. Powell also sought to discourage notions that rates couldn’t go back to where they were during the pandemic. During that period, the key rate was set at 0 percent.

A few important releases were made public on Wednesday. First, the ADP nonfarm payroll report found that the economy added 150,000 jobs in the past month. This was lower than the expected 163,000 jobs added and lower than last month’s gain of 157,000 positions.

The ISM Services PMI was next to be released on Wednesday and came in at 48.8 percent, which was far lower than the expected 52.6 percent and was also below last month’s figure of 53.3 percent. This has led some to say that the economy is finally starting to show signs of a true slowdown, which may make it easier to justify lower interest rates.

Finally on Wednesday, the FOMC meeting minutes from June were released. The main takeaway from those minutes was that inflation was moving in the right direction to see possible rate cuts later in the year. However, the Fed still wanted more evidence that this was the case before taking action.

Markets were closed for the holiday on Thursday, but they made up for lost time with some consequential news on Friday morning. The Bureau of Labor Statistics (BLS) released its nonfarm payroll report that said 206,000 jobs were added over the previous month. This was more than the 191,000 expected prior to the release but fewer than the 218,000 added last month.

It’s also worth noting that initial figures from April and May were revised downward. The April figure was revised downward to 108,000 from 165,000 while the May report was changed to 218,000 from an initial reading of 272,000. The unemployment number jumped to 4.1 percent, and this is the third straight month in which this figure has increased.

Average hourly earnings increased .3 percent on a monthly basis in June, which matched expectations. However, it does represent a slight slowdown from the .4 percent increase in May.

The S&P 500 finished the week up 67.82 points to close at 5,567. The index made its low of the week on Monday morning when it dipped to 5,447 and closed the week at its highest point.

The Dow was flat this week closing up 67.46 points to finish at 39,375 at the end of trading Friday. The low of the week was made on Monday morning at 39,115 while the high was made on Wednesday morning when the market hit 39,389.

Finally, the Nasdaq would close the week above 20,000 for the first time as it gained over 540 points to finish at 20,391. That represented a 2.74 percent gain for a market that has gained more than 21 percent during 2024.

On Tuesday and Wednesday, Jerome Powell is expected to testify in front of the House Financial Services Committee. On Thursday, inflation data is set to be released while price change data will be released on Friday.

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