Week in Review for week ending 7-5-24
The stock market continued its upward trend this past week, with the S&P 500 gaining another 2% and the NASDAQ climbing an impressive 3.5% (FactSet). These increases add to the year-to-date gains, reinforcing the market's strong performance in 2024.
June’s jobs report, released by the Bureau of Labor Statistics (BLS), showed the creation of 206,000 new jobs. The unemployment rate ticked up to 4.1%, rising from 4% in May and 3.9% in April. Some might interpret this as a sign of a weakening labor market, but I see it as a normalization. The labor market is adjusting from historically low unemployment levels to a more sustainable and healthy employment rate.
I view this normalization in the labor market is a positive development as it aligns with the narrative the Federal Reserve is looking for. A stabilizing job market should support the case for the Fed to begin lowering interest rates. This sentiment was mirrored in the bond market, where the 10-year Treasury yield declined slightly.
Looking Ahead
Looking forward, all eyes will be on the Consumer Price Index (CPI) report, which is set to be released this Thursday. This report will provide further insight into the current state of inflation. May’s CPI was at 3.3%, and the upcoming report will indicate whether this moderating trend is continuing. A continued moderation in inflation would further support the Fed's potential move toward easing interest rates, which could positively impact the markets.
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Best regards,
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