Weekly Market Recap – July 7, 2023
The major indices struggled to keep the positive stride from the previous week as the S&P 500 and NASDAQ fell roughly 1%, while the Dow Jones stumbled close to 2%. Thursday saw a drop in stocks due to rising fears over a tightening monetary policy, and a brief surge in the wake of Friday’s employment report fizzled out by the afternoon.
The consecutive week witnessed a rise in U.S. government bond yields on account of the resurfacing concerns about potential hikes in interest rates. The 10-year Treasury bond yield climbed to 4.05%, marking a four-month peak, and the 2-year note momentarily touched 5.00% on Thursday, descending below that mark on Friday.
Following a 14-month streak of surpassing economists’ predictions, the U.S. job market underperformed slightly in June. The economy added 209,000 jobs, not reaching the anticipated figure of approximately 240,000, making it the smallest monthly rise since December 2020. The unemployment rate dipped to 3.6%.
Forecasts are subdued as we enter the earnings season with major banks preparing to announce their second-quarter results this week. According to a FactSet survey of analysts on Friday, S&P 500 companies are projected to see an average earnings decrease of 7.2% compared to the same period last year, marking the largest earnings dip since Q2 2020.
Minutes from the Fed’s meeting in mid-June, released on Wednesday, added weight to the expectation of more interest-rate hikes this year. The minutes revealed a consensus among Fed officials about the necessity for additional hikes, with some non-voting members advocating for a continuation of rate increases in their June meeting, instead of putting the cycle on hold.
S&P 500 companies curtailed their dividend payments in Q2 this year, breaking a sequence of seven straight quarters of growth, as per S&P Dow Jones Indices. The payout stood at $143.2 billion in dividends, a drop from Q1’s record of $146.8 billion.
For the second successive week, oil prices gained support from supply reductions by several key oil-producing nations. U.S. crude was priced close to $74 per barrel on Friday, a week-on-week rise of over 4%, and almost 7% more than its price a fortnight ago.
The Consumer Price Index report due for release on Wednesday will reveal whether the recent tempering of inflation continued into June. Inflation, as per the CPI, grew at an annual rate of 4.0% in May, while core inflation, excluding typically fluctuating costs like energy and food, was 5.3%.
Major U.S. Economic Reports
| Report | Period | Actual | Previous |
| S&P U.S. manufacturing PMI (final) | June | 46.3 | 46.3 |
| ISM manufacturing | June | 46.0% | 46.9% |
| Construction spending | May | 0.9% | 0.4% |
| Factory orders | May | 0.3% | 0.3% |
| ADP employment | June | 497,000 | 267,000 |
| Initial jobless claims | July 1 | 248,000 | 236,000 |
| U.S. trade deficit | May | -$69B | -$74.4B |
| Job openings | May | 9.8 million | 10.3 million |
| S&P U.S. services PMI | 54.4 | 54.1 | |
| ISM services | June | 53.9% | 50.3% |
| U.S. nonfarm payroll | June | 209,000 | 306,000 |
| U.S. unemployment rate | June | 3.6% | 3.7% |
| U.S. hourly wages | June | 0.4% | 0.4% |
| Hourly wages year over year | 4.4% | 4.4% |
Closing Prices for the Week
| Contract | Close |
|---|---|
| Dow Jones Industrials Average | 33,734.88 |
| Nasdaq Composite | 13,660.72 |
| S&P 500 Index | 4,398.95 |
| CBOE Volatility Index | 14.83 |
| S&P GSCI | 551.84 |
| U.S. Dollar Index | 102.272 |
| 10-Year T-Note (Sep ’23) | 110-215 |
| Crude Oil WTI (Aug ’23) | 73.86 |
| Natural Gas (Aug ’23) | 2.582 |
| Gold (Aug ’23) | 1,932.5 |
| Silver (Jul ’23) | 23.289 |
| Corn (Dec ’23) | 494-4 |
| Wheat (Sep ’23) | 649-4 |
| Soybean (Nov ’23) | 1317-6 |
| Coffee (Sep ’23) | 160.90 |
| Sugar #11 (Oct ’23) | 23.53 |
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