Stocks ended the holiday-shortened week mostly higher, with the S&P 500 and NASDAQ hitting new record highs. Stock trader sentiment was buoyed by continued optimism around possible interest rate cuts later this year, despite a mixed bag of economic data. Tech and communication services sectors led the charge, while the Dow dipped slightly due to lagging performance in energy and health care. Treasury yields fell as traders sought safety following signs of slowing economic momentum. Oil prices bounced back slightly after last week’s sharp drop, while gold remained stable just below its recent peak. The U.S. dollar edged higher against a basket of major currencies.
Last Week’s Economic News
- The labor market added 140,000 jobs in June, missing expectations and marking a continued slowdown from April and May. The unemployment rate ticked up to 4.1%, the highest since late 2021.
- Average hourly earnings rose in June and 3.8% year-over-year, showing some continued wage pressure despite broader economic softening.
- The ISM Manufacturing Index slipped in June, signaling contraction in the sector for the third consecutive month.
- Job openings in May fell to 7.5 million, their lowest level since 2021, suggesting easing labor demand.
- Construction spending declined slightly in May, with weakness in residential and public construction more than offsetting gains in private nonresidential building.
- The average national price of regular gasoline was \$3.28 per gallon as of July 1, over \$0.20 below the price a year ago.
- Initial jobless claims rose to 238,000 for the week ended June 29, and continuing claims increased to 1.86 million—both signaling a modest uptick in unemployment assistance.
Eye on the Week Ahead
The second week of July brings the latest Consumer Price Index (CPI) and Producer Price Index (PPI) data, which will be closely watched for confirmation of moderating inflation. Markets will also monitor comments from Federal Reserve officials as investors look for further clues on the timing and likelihood of rate cuts later in the year.
Have a nice week!
Sincerely,
Robert G. Carpenter