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HomeMutual FundMarket Perspective for July 10, 2022

Market Perspective for July 10, 2022

The foremost market indexes had been up for the week, helped by a powerful jobs report. The S&P 500 gained 2 p.c, and the Dow Jones Industrial Common was up virtually 1 p.c. The Nasdaq gained 4.6 p.c for the week and has closed 5 straight days within the inexperienced for the primary time this yr.

For the yr, the markets are nonetheless down. The Dow is down 13.8 p.c, the S&P 500 is decrease by 18.2 p.c, and the Nasdaq is down 25.6 p.c

The roles report for June was launched on Friday, exhibiting a rise of 372,000 jobs. The higher-than-expected report calmed fears {that a} recession had both already begun or was about to start. The unemployment charge stands at 3.6 p.c, which is a determine that’s not in step with an financial downturn.

There was an excessive amount of discuss that we’re already in a recession, which can be confirmed proper or flawed when the second-quarter GDP is launched later this month. However 4 months in a row of almost 400,000 job development is making some really feel we’ll keep away from two consecutive detrimental GDP studies.

The economic system can be put to the check within the coming months with persevering with excessive inflation and an virtually certainty that the Federal Reserve will increase charges a number of extra occasions this yr.

The primary quarter GDP shrank by 1.6 p.c, and the most recent from the Atlanta Federal Reserve’s GDPNow tracker believes that the second quarter will present one other contraction of 1.2 p.c. Most economists outline a recession as two consecutive detrimental GDP studies.

Preliminary unemployment advantages filings reported on Thursday confirmed a rise of 4,000 from the earlier interval at 235,000. The entire is the best since January 15. The four-week shifting common elevated to 232,500, its highest degree since December 2021.

Extra regarding is the deliberate layoffs determine. Based on the job placement agency Challenger, Grey & Christmas, deliberate layoffs jumped to 32,517 in June and the best complete since February 2021.

The auto sector reported a 155 p.c improve in layoffs in contrast with the identical interval final yr. The actual property sector additionally reported a excessive variety of layoffs. The job placement agency stated ten industries have already introduced extra layoffs this yr than in 2021 out of the 30 industries they observe.

Additionally famous within the job report was that the typical hourly earnings elevated simply 0.3 p.c, which could possibly be one other signal that inflation is slowing. For the yr, common hourly earnings are up 5.1 p.c on a 12-month foundation.

The yield curve inverted final Tuesday for the second time this yr when the 2-year U.S. Treasury yield rose above the 10-year Treasury yield. An inverted yield curve is an indicator of a doable recession. The final time the yield curve inverted was final April. As of the shut on Friday, the yield curve stays inverted.

Oil costs fell under $100 per barrel final week for the primary time since early Might. If a recession happens, the assumption is that there can be a drop in demand for oil. However the drop under $100 didn’t final lengthy as West Texas Intermediate closed Friday at $104.80.

Recession worries additionally brought on the 30-year fastened mortgage charges to drop once more final week. Over the previous two weeks, mortgage charges have dropped by half a p.c. The 0.5-point drop solely offers minor aid to potential homebuyers as residence costs stay excessive.

Housing ought to proceed to normalize if value development slows attributable to an absence of patrons, an financial slowdown and an growing housing provide. Based on Freddie Mac, the typical 30-year fastened mortgage stands at 5.3 p.c.

Subsequent week, second-quarter earnings start, and the June client value index can be launched. The buyer value index will give the Federal Reserve an concept if their charge hikes are beginning to gradual inflation. The CPI report might affect their determination later this month on the subsequent FOMC assembly.



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