The stock market fared quite nicely during the Fourth of July week. All the major benchmark indexes posted gains, with the Nasdaq and the S&P 500 reaching record highs a few times during the week. Only the small caps of the Russell 2000 slid lower. The June jobs report gave investors encouragement that the Fed may be inclined to cut interest rates as early as September. Information technology, consumer discretionary, and communication services outperformed among the market sectors, while energy and health care lagged. Ten-year Treasury yields dipped 7.0 basis points. Crude oil prices advanced as tensions in the Middle East escalated. Gas prices increased, while some expect prices at the pump to continue to rise.
Last Week’s Economic News
- Total employment rose by 206,000 in June, slightly under the average monthly gain of 220,000 over the prior 12 months. Total employment proved not to be quite as robust as originally thought. In June, the unemployment rate was 4.1%, an increase of 0.1 percentage point from the May rate. The number of unemployed rose by 162,000 in June to 6.8 million. These measures are higher than a year earlier when the jobless rate was 3.6%, and the number of unemployed was 6.0 million. The number of long-term unemployed (those jobless for 27 weeks or more) rose by 166,000 to 1.5 million in June. This measure is up from 1.1 million a year earlier. The long-term unemployed accounted for 22.2% of all unemployed people in June.
- The S&P Global US Manufacturing Purchasing Managers’ Index™ ticked up to a three-month high in June. New orders rose for the second straight month, prompting a rise in production. Survey respondents noted that employment increased at the fastest rate since September 2022. While producer costs continued to rise, the rate of input cost inflation eased in June, and selling prices rose at the slowest pace this year.
- Business activity and new orders expanded in June, according to the S&P Global US Services PMI®. Activity in the services sector has risen in each of the past 17 months, with the latest expansion the most pronounced since April 2022. Survey respondents noted that the rising demand sparked an increase in workforce numbers for the first time in three months. Both input and output prices eased in June.
- According to the latest Job Openings and Labor Turnover Summary, the number of job openings in May rose by 221,000 (8.1 million), the number of hires increased by 141,000 (5.8 million), and the number of total separations grew by 85,000 (5.4 million).
- The goods and services trade deficit for May was $75.1 billion, up $0.6 billion from the April deficit, according to the latest report from the Bureau of Economic Analysis. Year to date, the goods and services deficit increased $14.4 billion, or 4.2%, from the same period in 2023.
- The national average retail price for regular gasoline was $3.479 per gallon on July 1, $0.041 per gallon above the prior week’s price but $0.048 per gallon less than a year ago.
- For the week ended June 29, there were 238,000 new claims for unemployment insurance, an increase of 4,000 from the previous week’s level.
Eye on the Week Ahead
Important inflation data is on tap for this week. The Consumer Price Index for June is out. May showed no increase in the CPI and a slight reduction in the 12-month figure. Also available this week is the Producer Price Index for June. May saw producer prices fall 0.2%.
Have a nice week!
Sincerely,
Robert G. Carpenter