The Global Update

July 1

• Stock indices advanced upon open with the S&P 500 reaching a new record high.
• Despite a lower close, the opening market rally was likely supported by the G20 summit’s promising news that President Trump and China’s President Xi agreed to restart trade talks.
• PMI manufacturing index rose by 5 tenths to a reading of 50.6 (slightly above consensus).
• ISM manufacturing reading for June came in at 51.7, slightly lower than the highest consensus range of 53.0 but the slowing still came in within consensus range.
• Construction was down -0.8 percent in May, below economist expectations.

July 2

• After yesterday’s record highs in the S&P 500 index, stocks opened slightly lower today.
• No major economic reports released today.

July 3

• Indices rallied again, the S&P 500 hitting another record high, as the market focused less on the ongoing US-China trade tensions and more on the likelihood of central banks across the globe lowering interest rates.
• ADP employment report showed 102,000 private-sector jobs were created in June, short of economist expectations of 140,000 new jobs.
• Initial jobless claims fell 8,000 to 221,000.
• Factory orders declined by – 0.7 percent, below -0.5% consensus expectations.

July 5

• S&P 500 futures rallied to another record high but backed off slightly when the US employment situation showed strong gains.
• Job gains tend to cool expectations of a larger Federal Reserve rate cut.
• No other major economic news was reported today.

July 8

• Although no major economic reports were released today, U.S. indices slipped slightly as bank and tech shares pressured the market downward as investors await the Federal Reserve’s next move.
• Following the previous sessions’ record-setting highs, the market is now focused on how soon and how much the Fed might trim interest rates.

July 9

• Indices opened lower as investors are beginning to worry about the extent to which the US-China trade dispute may affect earnings.
• The June NFIB Small Business Optimism Index was 103.3, lower than the expected reading of 104.
• The May Job Openings and Labor Turnover Survey (JOLTS) came n at 7.323 million, lower than the anticipated figure of 7.4 million.

July 10

• Fed chairman Powell announced that a rate cut, possibly this month, may be forthcoming.
• The market’s relief in hearing this statement was evident in its advance toward another record-setting high.
• The S&P 500 nudged above the 3,000 mark for the first time ever though it did not close above above it.

July 11

• Optimism regarding yesterday’s statement by Fed chairman Powell continues to support the broader market.
• Powell said that the economic outlook has not improved over recent weeks, and that uncertainties surrounding trade tensions and the global economy continue to weigh on the US economy.
• The FOMC minutes also showed consensus among central bank officials in support of a rate cut.
• Jobless claims fell 13,000 to 209,000 in the week ended July 6, lower than economist expectations of 224,000 new claims.

July 12

• Indices rose on limited news.
• The rally appears to be steaming ahead on Powell’s congressional testimony last week, setting the stage for the central bank to lower rates.
• S&P 500 closed above 3,000 for the first time ever.

July 15

• Markets took a breather from its record-breaking rally last week, with traders preparing for the corporate earnings to roll in.
• Empire State Manufacturing Index jumped to 4.3 in July from -8.6 in June–economists having expected a reading of 0.8.

July 16

• Indices backed off from its record highs slightly despite a strong read on the US consumer.
• S. retail sales increased 0.4% in June, higher than an expected 0.1% gain.
• Prices for foreign imports to the U.S. declined 0.9% in June, indicating that inflationary pressures have been limited thus far.
• Industrial production in June remained unchanged while capacity utilization in June came in lower at 77.9% as compared with expectations of 78.2%.

July 17

• Indices fell on yesterday’s comments from President Trump that trade talks between the US and China have stalled, and that new tariffs on $325 billion of Chinese goods may be imposed in the coming months.
• Housing starts fell 0.9% in June from the prior month to1.253 million while a figure of 1.260 was expected.
• Residential building permits declined by 6.1% from May– the biggest monthly drop since March 2016.

July 18

• Stocks bounced on rumors that the Fed may take a more aggressive approach to cutting interest rates than previously expected.
• New York Federal Reserve Bank President John Williams when he suggested the Federal Reserve should be more aggressive in its monetary policies in an effort to prevent a slowdown in the U.S. economy.
• Initial jobless claims increased 8,000 to 216,000.
• The Philadelphia Federal Reserve business outlook survey soared to a 2-month high and jumped by the most in a decade.

July 19

• In contrast to yesterday’s gains, likely due to John William’s comments, the Fed attempted to temper the comments when James Bullard said a 25 basis point rate cut in the near term would be appropriate.
• The consumer sentiment index is expected to be 98.4, within consensus range.

July 21

• The S&P 500, Dow Jones, and Nasdaq advanced despite signs of weaker economic activity as measured by today’s Chicago Fed National Activity Index, which is the only economic report to be released today.
• Economists expected 0.1 from the National Index while the figures came in at -0.02.
• It’s earnings season, and this week will see over 140 S&P 500 companies and one third of the Dow Jones companies reporting Q2 earnings.
• After a strong beginning last week, earnings are anticipated to be relatively strong, though the dominant factor supporting the current rally is the expectation of a forthcoming Fed rate cut.