THE WEEK ON WALL STREET
Stocks turned lower as a quiet news week offered investors little fresh visibility into the market overhangs of economic slowdown and inflation.
The Dow Jones Industrial Average dipped 1.28%, while the Standard & Poor’s 500 fell 2.21%. The Nasdaq Composite index dropped 4.13%. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.49%.1,2,3
REBOUND FIZZLES
Stocks struggled last week amid poor market liquidity typical of the summer months and a news vacuum ahead of the second-quarter earnings reports. Investors also appeared to be anticipating guidance at the July Federal Open Market Committee meeting. What little news there was proved generally disappointing. A steep decline in consumer confidence preceded Fed Chair Powell's acknowledgment that inflation may persist.
Stocks stumbled after a profit warning from a high-end retailer, which highlighted recession risks. The sentiment suffered from a 4.7% increase in the core personal consumption expenditures index, which is the Fed’s preferred measure of inflation. It remained near levels not seen since the 1980s. 4
CONSUMER CONFIDENCE WANES
The Conference Board’s Consumer Confidence Index declined to its lowest level since February 2021, falling from 103.2 in May to 98.7 in June (1985=100). While consumers’ assessment of current conditions slipped only marginally, their short-term outlook for income, business, and labor market conditions eroded substantially, touching its lowest level since March 2013.5
This rising pessimism about the short-term outlook was especially notable in consumers' assessment of financial prospects, with 15.9% expecting their incomes to increase (down from 17.9% in May) and a growing share of individuals expecting their incomes to decrease (15.2% in June vs. 14.5% in May).6
BY THE NUMBER$
WHERE OUR TAX DOLLARS GO - The Congressional Budget Office projects that the spending of the US government for fiscal year 2023, i.e., the 12 months beginning 10/01/2022, will be $5.87 trillion, split between mandatory spending (62.6%), discretionary spending (29.9%) and interest expense (7.5%) (source: CBO).
A RECORD TOTAL - As of 3/31/2022, US single-family homes were worth $39.0 trillion, outstanding mortgages totaled $11.2 trillion, resulting in $27.8 trillion of home equity, an all-time record (source: Federal Reserve). 7
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Factory Orders.
Wednesday: Federal Open Market Committee (FOMC) Meeting Minutes. Job Openings and Labor Turnover Survey (JOLTS). Institute for Supply Management (ISM) Services Index.
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims.
Friday: Employment Situation.
Source: Econoday, July 1, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Thursday: Levi Strauss & Co. (LEVI).
Source: Zacks, July 1, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
THE WEEKLY RIDDLE
It weighs nothing, but when you put it into any container it makes the container lighter. What is it?
LAST WEEK’S RIDDLE: In a drawer are six pairs of red socks, four pairs of white socks and five pairs of blue socks. In total darkness, how many socks would you have to grab to be certain you had a matching pair?
ANSWER: Four socks. Four is the maximum number you'd need to pull to ensure you had at least two socks that matched. (Don't believe it? Give it a try!)
