What happened last week…
The stock market was lower with weekly performances as follows: DJIA (-2.10%), S&P 500 (-2.06%), NASDAQ (-3.35%). Both the S&P 500 and NASDAQ finished in the red for three straight weeks. The DJIA snapped a four-week winning streak. Year-to-date performances are: DJIA (5.43%), S&P 500 (12.09%), NASDAQ (11.76%).
The Federal Reserve held interest rates at 5.25% to 5.50%, as expected. It was the eighth straight meeting where rates were unchanged. Fed Chairman Jerome Powell indicated that a rate cut could happen at the next meeting in September saying, “The broad sense of the committee is that the economy is moving closer to the point at which it would be appropriate to reduce our policy rate.” Powell said a 50-basis point cut is “not something we’re thinking about right now.” Powell also said, “The second-quarter inflation readings have added to our confidence and more good data would further strengthen that confidence.” The next Federal Open Market Committee meeting occurs September 17-18.
The ADP employment change missed expectations (150,000) as it decreased to 122,000 from the upwardly revised 155,000 (from 150,000). The unemployment rate landed higher than expectations (4.1%) as it rose to 4.3% from 4.1%, the highest since October 2021. Nonfarm payrolls missed expectations (185,000) as it decreased to 114,000 from the downwardly revised 179,000 (from 206,000). Average hourly earnings month-over-month missed expectations (0.3%) as it slid to 0.2% from 0.3%.
The manufacturing PMI for July missed expectations (48.8) as it decreased to 46.8 from 48.5, making it the fourth straight monthly decline and the 20th contractionary reading (below 50) in the past 21 months. It is the lowest reading since last December (47.1).
According to FactSet, as of August 2, 75% of S&P 500 companies have reported earnings with 78% having a positive EPS surprise and 59% having a positive revenue surprise. The blendedearnings for the S&P 500 is 11.5%, which would be the highest rate since Q4 2021 (31.4%). The blended revenue for the index is 5.3%, which would be the 15th straight quarter of growth.
This week…
The following companies report earnings this week: PLTR, ZTS, LLY.
On Monday, the non-manufacturing PMI for July is expected to increase to 51.0 from 48.8, just the third contractionary reading (below 50) in 49 months.
Thanks for Reading!
- The Rockline Team