Market Review

Job Data Disappoints, How did Markets React

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Income Planning, Retirement Planning, wealth management , , , , , , , , , ,
job data

U.S. equity indexes managed to close mostly higher despite disappointing job data. The S&P 500 and Nasdaq established new weekly closing highs. Investors weighed the impact of rising Covid-19 cases on the recovery. Growth outpaced value as the Nasdaq (+1.5%) led the advance last week. A holiday-shortened week is here and the economic calendar will be more focused on events abroad. The U.S. economic data is light. The most anticipated announcement will come from the ECB on Thursday.

Last Week Highlighted by Job Data

The S&P 500 finished August with its 7th straight monthly gain. Financial stocks dropped 2.3%. The dollar continued its slide after the economy added just 235,000 jobs in August. This number was far below expectations of 720,000. The ADP report showed that private payrolls also increased much less than forecast. The labor numbers cast doubt on the Fed’s next move on tapering. Manufacturing jobs rose, but services hiring slowed as the market braces for several jobless aid programs expiring this week. On the positive side, the unemployment rate fell to 5.2%. The underemployment rate dropped sharply to 8.9% from 9.6%, and jobless claims hit 340,000, a new pandemic low.

Other U.S. data reflected a still expanding economy that nonetheless is showing some cracks. Consumer confidence fell in August to the lowest level since February. Chicago PMI deteriorated more than expected to 66.8 from 73.4. Factory orders and the ISM Manufacturing PMI picked up in August. However, the services PMI fell from its July all-time high reading, consistent with the jobs report. U.S. home prices rose 18.6% Year-over-Year in June. The largest annual gain in history. Crude oil saw little volatility despite shutdowns from Hurricane Ida. OPEC decided to keep its modest production increases in place. China’s August manufacturing activity fell to 50.1 from 50.4. But a rebound in Chinese stocks lifted the emerging markets index by 3.4%. Canada’s economy unexpectedly contracted by 1.1% in Q2 as pandemic restrictions weighed.

Week Ahead

A holiday-shortened week and the economic calendar will be more focused on events abroad. The most anticipated announcement will come from the ECB on Thursday. Despite hot inflation data, the committee is expected to wait several more months before deciding on tapering pandemic-related asset purchases, which are due to end in March 2022. Additional monetary policy updates will come from Australia tonight and Canada on Wednesday.

In the U.S. more job data, the JOLTS Job Openings report comes out on Wednesday. Producer prices are expected to ease in Friday’s PPI report. In Asia, China will deliver trade balance and inflation numbers. Japan’s final Q2 GDP reading is released late on today. The Eurozone will present revised Q2 GDP and the UK’s monthly GDP update comes in Friday. The week also closes with Canada’s employment account.

Equity markets will look at the Covid case and death rates for how bad this variant will be, and how much economic activity will be slowed by it. Year-to-date index performance; Dow up 15.56%, S&P up 20.7%, and Nasdaq up 19.2% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Markets Reach All-Time Highs

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market, wealth management , , , , , , , ,
all-time highs

The S&P 500 and Nasdaq Composite Indexes closed at all-time highs after the Fed Chair reassured markets. Equity indexes rallied as investors weighed the tragic events in Afghanistan against more transparency from the Fed’s monetary policy timeline. The Nasdaq rose nearly 3% and the Dow and S&P 500 added 1-1.5%.

Last Week All-Time Highs

U.S. equity indexes rallied as investors weighed the tragic events in Afghanistan against more transparency from the Fed. Crude oil rebounded with an 11%+ jump, and gold prices rose modestly. Treasury yields held their weekly gains. The U.S. dollar dropped after Fed Chair Powell calmed markets with his comments on inflation and tapering. PCE Core Price Index data show annual price increases at a 30-year high of 3.6%. However, Powell reiterated that higher prices are not broad-based. Surge-price categories are moderating, and that both wages and long-term expectations do not suggest “excessive inflation”. Powell affirmed that asset purchase tapering is likely to begin later this year. (Tapering is the central bank’s plan to start gradually reducing bond purchases by the end of the year.) He also said that interest rate hikes aren’t on the table until the more stringent maximum employment test is met.

In other U.S. economic news, August Flash PMIs showed continued expansion. However, this reading is at a slower pace than July and slightly below expectations. Existing home sales rose 2% in July. All the annual gains in homes priced above $500K, while new home sales ticked up 1% in July. Durable goods orders for July fell 0.1% Month-over-month. These numbers did exceed forecasts, while the second Q2 GDP estimate came in slightly higher at 6.6%. Corporate profits increased at a 9.2% quarterly rate to a record $2.8 trillion, supported by historically tight credit spreads. Overseas, Germany’s August PMIs fell from July but remained solidly in expansion as Q2 GDP grew more than expected at 1.6%. Finally, minutes from the ECB’s latest policy meeting showed some concern of understating inflation risks that may or may not be durable.

Week Ahead

Based on the market’s reaction to Powell’s Jackson Hole speech, investors seem to feel they have more clarity around the Fed’s intended path and can avoid another “taper tantrum”. Geopolitical tensions and coronavirus variants may affect economic growth or dent consumer sentiment. Powell made it clear how strong the link is between jobs and potential rate hikes, and this week will bring several updates on the labor front, with the ADP report on
Wednesday followed by non-farm payroll report on Friday.

China’s Manufacturing PMI arrives Monday, where the government continues regulatory crackdowns that keep Chinese stocks under pressure. Tuesday is busy with German employment numbers, Canadian and Australian GDP updates, and U.S. consumer confidence. Oil’s recent volatility will focus traders on Wednesday’s OPEC meetings. Global growth concerns have eased somewhat, and increased crude production is expected. Lastly, U.S. ISM manufacturing and services PMIs are anticipated to fall Month-over-Month while remaining firmly in growth mode.

Year-to-date index performance; Dow up 15.84%, S&P 500 up 20.06%, and Nasdaq up 17.39% through the close on Friday.

Let’s connect if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

School is Back In Session

jim family wealth management, Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market, wealth management , , , , , , , ,
school

Just like that, it’s back-to-school season. Tell me, where did the summer go?

As kids of all ages go back to school, with all of the apprehension and excitement that may bring in these turbulent times, it’s also a great reminder that in life, summer ends but the learning never does. We are always presented with challenges and opportunities to expand our knowledge and grow.

It appears, though, that Americans are slipping in that regard. According to recent Forbes survey, the U.S. is experiencing a steep decline in financial literacy in recent years – especially when dealing with more complex topics like inflation, financial risk, and mortgage rates.

How is your financial IQ? Are there some topics you could use some brushing up on?

The easiest way to fix any gap in knowledge is to ask a question. I can be a great resource for you, and we can discuss how your strategy is positioned to face these complex times. The market brief below gives current insight as well. Feel free to connect with me and keep the financial literacy conversation going to ensure your circle has the same potential for wealth and wellness.

Last Week

U.S. equities posted mixed results as volatility plummeted towards the lowest levels of the year. The Dow and S&P 500 indexes managed modest gains to once again close at record highs, while the Nasdaq Composite fell slightly. Fed officials commented that while the labor market still has room for improvement, inflation is already at levels that would justify interest rate hikes. U.S. job openings surged in June to a record 10.1 million, but businesses are still struggling to find qualified labor for the rebounding economy. Jobless claims fell to 375,000 and continuing claims dropped to a pandemic-era low of 2.8 million.

U.S. productivity grew less than expected at 2.3% for Q2, igniting stagflation fears. Sentiment numbers also disappointed, as small business optimism reversed in July to 99.7 from 102.5. The University of Michigan Consumer Sentiment also fell to 70.2 in early August, a 10-year low. Americans are more concerned about the economy, inflation, and the delta variant. Crude oil gained as the Biden administration pressured OPEC to increase output. For the week, the Dow finished up 0.94%, S&P up 0.75%, and Nasdaq down 0.07%.

This Week

Despite concerns about sentiment, market breadth, and seasonal weakness, stocks continue to climb the wall of worry. Many pundits are calling for a correction, but there seems to be lack of a legitimate catalyst to create that scenario. This week the economic calendar is rather light. Given recent economic data and a policy committee that is growing impatient on tapering, Fed Chair Powell’s town hall event today will be scrutinized along with the July FOMC meeting minutes on Wednesday.

The July U.S. Retail Sales report this morning showed a contraction based on slumping services spending. Where is all the school spending? Regional manufacturing updates came with the Empire State Index declining on Monday followed by the Philly Fed Index on Thursday. The U.S. calendar rounds out with industrial production numbers today and housing starts on Wednesday. Year-to-date index performance; Dow up 16.04%, S&P up 18.96%, and Nasdaq up 15.01% through the close on Friday.

Happy back-to-school week!

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Summer Tug of War Drags On

jim Financial advisor, Investing, Market Brief, Market Commentary, Market Outlook, Market Review, Retirement Planning, Stock Market , , , , , , , ,
tug of war

U.S. equities survived a tumultuous week largely intact. Investors weighed mixed earnings reports, inflation figures, and rising COVID-19 cases attributed to the Delta variant. Labor market headlines will remain in focus after the Fed’s comments, and with jobless claims stubbornly stuck at the 400,000 level, investors will welcome additional data this week with the U.S. ADP employment report on Wednesday, followed by the monthly non-farm payrolls report on Friday.

Last Week

U.S. equities survived a tumultuous week largely intact. Investors weighed mixed earnings reports, inflation figures, and rising COVID-19 cases attributed to the Delta variant. The Nasdaq slipped 1% after Amazon’s first EPS miss in 3 years. The Dow and S&P 500 finished slightly lower. The S&P 500
Equal-Weight Index gained ground as value outperformed growth. U.S. Treasury yields fell after the Federal Reserve indicated it is in no hurry to tighten monetary policy.

The Fed’s accommodative stance sent the dollar tumbling, lifting gold prices and sending crude oil higher by 2%. Fed Chair Powell also indicated that asset purchase tapering would likely be tied to labor market improvements as opposed to consumer price data. The U.S. GDP report highlighted how much the economy is struggling to readjust to the new normal. Second quarter growth accelerated by a robust 6.5%, but well below estimates of 8.4%. Some sectors continue to be held back by supply constraints, while others stress to recover from the pandemic.

U.S. home prices continue to break records, but new home sales stumbled in June, dropping 6.6%. Pending sales of existing homes dropped 1.9%. Consumer confidence remained high, as the Conference board’s index improved for a 6th straight month in July. U.S. durable goods saw continued growth in June, but the 0.8% increase fell short of the 2.1% expected. Chicago PMI surged to 73.4 in July, just shy of a record high. Inflation persisted in June, with the Core PCE Price Index rising 3.5% YoY, the biggest move since 1991. Finally, Chinese stocks remained under pressure as the SEC has stopped processing U.S. IPO registrations of Chinese companies while it considers new disclosures.

Week Ahead – Tug of War continues…

Labor market headlines will remain in focus after the Fed’s comments, and with jobless claims stubbornly stuck at the 400,000 level, investors will welcome additional data this week. The U.S. ADP employment report comes out on Wednesday, followed by the monthly non-farm payrolls report on Friday. U.S. ISM PMIs will also refresh, with services on Wednesday. Two more global central bank meetings await. The RBA may reverse its recent tapering plans amid continued lockdowns in Australia, while the BOE will consider hot inflation figures and a surprise drop in new UK coronavirus cases. Although many of the big names have already reported, Q2 earnings season is only halfway over. S&P 500 Y/Y revenues are up a record 21% and earnings up 86%, expectations for Q3 and Q4 are building.

Year-to-date index performance; Dow up 14.14%, S&P up 17.02%, and Nasdaq up 13.85% through the close last Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.

Massive Earnings Week – Market Brief July 26, 2021

jim Financial advisor, Market Brief, Market Commentary, Market Outlook, Market Review, Stock Market , , , , ,
earnings

U.S. stocks shook off a Monday selloff sparked by coronavirus variant concerns to finish positive for the week. The Dow, S&P 500, and Nasdaq finished at all-time closing highs. Large-cap growth stocks lifted the Nasdaq Composite by nearly 3% and the S&P500 by 2%. Plenty of potential market-moving events this week, from tech earnings to the Fed meeting and key economic releases.

Last Week

On the positive side, continuing claims declined by 126,000 to a pandemic-era low of 3.24 million. Housing starts increased more than expected in June, despite labor and land shortages which are weighing on homebuilder confidence. Existing home sales rose 1.4% in June after 4 straight months of decline. The median price reached an all-time high of $363,000, up 23.4% compared to a year ago. After Q2’s growth, signs of cooling emerged as the IHS Markit Composite PMI slid to 59.7 in July from 63.7. Finally, shares of many U.S.-listed Chinese companies fell sharply on Friday. This was a result of authorities stepping up restrictions on the private education industry and increased scrutiny on overseas listings.

U.S. economic data was mixed, headlined by a surprise jump in unemployment claims, which totaled 419,000 versus estimates of 350,000. The decline in Treasury yields last week shows investors believe inflation is not the biggest problem facing the U.S. economy. Instead, investors worry about slowing growth. Even though Federal Reserve officials have signaled that they will hold off raising interest rates until after inflation climbed above their 2% target rate, eroding job growth has shown investors that the economy may not run as fast as anticipated.

Week Ahead

Expect discussions to accelerate amongst Fed officials as to when to start reducing asset purchases and how quickly to taper them, although a final decision is not expected until later in the summer. Their remarks will come ahead of the first look at Q2 GDP on Thursday where 8.5% growth is anticipated, the second-fastest pace since 1983 and exceeded only by last summer’s strong rebound. U.S. consumer confidence and durable goods reports will drop on Tuesday. Tesla, Apple, Microsoft, Google, Facebook, PayPal, and Amazon all report earnings this week. The week and the month close on Friday.

Year-to-date index performance; Dow down 14.56%, S&P down 17.46%, and Nasdaq up 15.12% through the close on Friday.

Click here if you would like to learn more about your options and if we can assist you with your wealth management, investment, and retirement planning.

This website is for informational purposes only and is not intended to be specific advice or recommendations. For specific advice or recommendations you would need to meet directly with one of our advisers.