Indices
- Dow 43,819, +1,613 or +3.82%.
- Nasdaq 20,273 (new closing high), +826 or +4.25%.
- S&P 6,173 (new closing high), +206 or +3.45%.
- MSCI EAFE 2653.71 (new closing high), +78.54 or+3.05%.
- USD10Y 4.283%, -9.2bp or -2.10%.
- WTI Crude $65.07/bbl, -$8.97 or-12.1%.
Markets Climb the Wall of Worry
A ceasefire in the Iran – Israel conflict sent markets soaring higher this week amidst lackluster economic data and somewhat hawkishCongressional testimony by Fed Chair Jerome Powell.Powell testified to Congress that the labor market remains strong while inflation and expectations of inflation have put the Fed into the position of maintaining rates at their current level for the time being.
The economic data was not promising this week. To wit:
- June Consumer Confidence fell precipitously to 93 vs 98.4 consensus and vs 98 last month.
- The U.S. Treasury Department extendedtheir extraordinary measures to keep the government from breaching the debt limit. July 24 is now the deadline for Congress to act to increase the limit.
- The 2nd revision to Q1 GDP decreased to -0.5% vs -0.2% forecast and vs the first revision of -0.2%.
- May Core Personal Consumption Expenditure (a key inflation measure) rose+0.2% vs consensus estimates of +0.1%. Year-over-year Core PCE ticked up to +2.7% vs +2.6% last month.If this trend continues, the Fed may find its hands tied with regard to cutting rates in 2025.
- June final Consumer Sentiment did improve slightly to 60.7 vs 60.5 expected and vs 60.5 last month.
- May Personal Income fell -0.4% vs +0.3% forecast and vs +0.7% last month.
- May Personal Spending fell -0.1% vs +0.1% forecast and vs +0.2% last month.
- The administration announced it was terminating trade talks with Canadaover a “digital tax” imposed on U.S. tech companies. Canada did not wait to retaliate and placed a quota on U.S. steel imports and a 50% tax on amounts exceeding that quota.
- Late yesterday, the Senate advanced the administration’s massive spending bill via reconciliation (thus avoiding a filibuster). The Senate will now debate the bill prior to voting and likely approve it now that GOP Senators Murkowski, Collins, Lee, Scott and Lummus have all yielded in their initial opposition to the bill.
Earnings, were ok but forward guidance was not encouraging...
- KB Homes (KBH) beat revenue and earnings projections but guided 2025 revenues lower.
- Nike (NKE) beat earnings and revenue projections and maintainedtheir current guidance while noting that tariffs will cost the company $1 billion.
- FedEx (FDX) beat their revenue and earnings estimates but guided their current quarter lower than Street expectations.
The Upcoming Week: June 30 -July 4
It’s a truncated week with the markets closed on Friday to observe Independence Day. However, the middle of the week is chock full of economic releases; final manufacturing and services data, JOLTS, and private payrolls. On Thursday, in addition to the normal jobless claims report, non-farm payrolls, the unemployment rate, and average hourly wages will all be published.
There are no earnings reports of note this week.
Economic Calendar
- Monday – N/A. Earnings: N/A.
- Tuesday – June Final U.S. S&P and ISM Manufacturing Surveys, May Job Openings and Labor Turnover Survey (JOLTS). Earnings: N/A.
- Wednesday– June ADP Private Payrolls. Earnings: N/A.
- Thursday – Initial Jobless Claims, June Non-Farm Payrolls, June Unemployment Rate, June Average Hourly Earnings, Final U.S. S&P and ISM Services Surveys. Earnings: N/A.
- Friday – Markets Closed in Observance of Independence Day.
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