Dow Jones Industrial Average(^DJI)
Last week, all three majors lost ground despite having the help of quarter-end window dressing. In fact, on Friday, though equity markets appeared poised to post substantial gains in the early going, in the last several hours of trading those gains all but evaporated. In the process, the three majors appeared to reflect additional trade/tariff related caution. On the day Friday, the S&P 500 edged 0.08% higher while the Dow Industrials inched 0.23% higher and the Nasdaq Composite added 0.09%. The Russell 2000 lost incremental ground (-0.12%.)
Given that this week is a holiday-shortened trading week, that it is mid-summer, between earnings seasons and the first trading week of Q3, the volume will be lighter than average. The economic calendar is also thin. Equity markets close early on Tuesday and are closed on Wednesday in honor of Independence Day.
In the aggregate, it would be fair to characterize equity market performance thus far in 2018 as being underwhelming.
Noteworthy economic releases for investors to keep an eye on this July 4th week include Monday’s focus on manufacturing and construction spending. On Thursday, the FOMC Minutes release at 2:00 pm will also garner investor focus. Friday, at 8:30 am, we receive the Employment Report. It will be a challenge for June’s data to match May’s stronger than expected results. For May, the Employment Report provided significant and positive headline driven momentum for investors. Non-farm payrolls were significantly stronger than expected – coming in at 223K – allowing for the official unemployment rate to drop to 3.8%. Private payrolls expanded by 218K while manufacturing continued to confound – adding 18K. Average Hourly Earnings on a Y/Y basis came in at a healthy 2.7%.
This week’s June Employment Report is expected to reflect a degree of moderation in recent gains. Econoday consensus is calling for an increase of 190K jobs in June. The unemployment rate is expected to remain unchanged at 3.8% while Private Payrolls (+183K) and Manufacturing Payrolls (+15K) are expected to stay in-channel with recent expansion.
S&P 500 (^GSPC)
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