Wall Street ended a strong first half of the year on a somewhat sour note, with all three major U.S. stock averages closing lower Friday after a higher open. The Nasdaq inched up 0.24% for the week as tech bounced back. Meanwhile, the S & P 500 and the Dow Jones Industrial Average declined 0.1% over the past five sessions. With two quarters in the books, the tech-heavy Nasdaq has advanced 18.1% so far in 2024. The S & P 500 is not too far behind, up 14.5% year to date, while the Dow is lagging behind, advancing just 3.8%. It was a pretty eventful week. In addition to some earnings season stragglers, such as Walgreens and Nike , we received an encouraging update on inflation and, of course, took in the first presidential debate of the 2024 cycle. The debate provides an opportunity to reiterate that, while we all have our own personal beliefs on issues, as investors, we must remain as clear-eyed as possible. Regardless of how one votes, we have to assess the impact candidates’ policies — and the outcome of the election, more broadly — will have on the economy, the stock market, and the individual companies we’re invested in. What does it mean in terms of fiscal and monetary policy, the regulatory landscape and on the geopolitical front (think tariffs and trade)? What do those potential policies, depending on the candidate that ultimately wins, mean for sales and earnings in the years ahead? Jim Cramer provided some initial thoughts during Friday’s Morning Meeting , and as we get closer to the election and have a better idea of how things seem to be shaping up, we will continue to analyze holdings through this lens. One edge we have with the current presumptive nominees for both parties — former President Donald Trump for Republicans and President Joe Biden for Democrats — is we’ve already experienced both in the White House. That’s helpful because if we feel the need to “barbell” our portfolio, as a means of diversifying based on the election outcome, we have a better idea of what to expect. Diversification is a critical part of investing, and there are many different layers to it. “Diversification of outcomes” is a crucial one that investors must be thinking about in the months to come, regardless of their own individual politics. The week’s biggest economic update came the morning after the debate: The core personal consumption expenditures price index — the Federal Reserve’s preferred measure of inflation — matched expectations, rising 0.1% month over month and 2.6% on an annual basis. A day earlier, we got a favorable final read on the first-quarter gross domestic product index, which was revised up slightly versus the second read. A pair of housing releases — Wednesday’s May new home sales report and Thursday’s May pending home sales report — came in below expectations. Energy and communication services were by far the best-performing sectors in the S & P 500 this week, rising 2.7% and 1.3%, respectively. In third place was real estate, which edged up 0.7%. Utilities led to the downside, dropping 1.1%, followed by materials and consumer staples, which were down 1.06% and 0.66%, respectively. In the week ahead, Constellation Brands will be the lone Club holding to report earnings, and we’ll also get several key updates on the state of the labor market. The U.S. stock market will be closed Thursday for the Fourth of July holiday. Economic data The main event is Friday’s June nonfarm payrolls report, which is among the most important monthly data releases for investors. While it doesn’t provide a direct read on inflation, it provides insight into consumer buying power, which for a consumption-based economy means the difference between continued growth and a recession. As of Friday, economists are looking for 195,000 payroll additions, a 4.0% unemployment rate (unchanged from May), and a 4% annual increase in hourly wages (down from the 4.1% reading we got in May), according to Dow Jones estimates. When considering wage inflation, anything above the rate of inflation — 2.6% per the Friday core PCE reading — means increased buying power for the consumer. That’s what we want to see, as long as the number is not so hot that it sparks fear of a rebound in inflation. Prior to the U.S. government’s jobs report, we’ll get a look at private sector payrolls Wednesday with the June ADP Employment report, which is expected to show 170,000 jobs were added in the month, according to Dow Jones. The ADP report isn’t as market moving as the nonfarm payrolls report, but expect investors to use to game the nonfarm payrolls report out later in the week. The so-called JOLTS report — the Job Openings and Labor Turnover Survey — kicks off the weeek of jobs data on Tuesday morning. The JOLTs release can provide insight on labor market tightness, which can help inform us on wage inflation. The tighter the market, the more companies may need to pay to entice top talent; it boils down to supply and demand. While jobs will be front and center, we’ll also get an update on the state of manufacturing thanks to the June ISM Manufacturing report out on Monday, and May factory orders report out on Wednesday. The June ISM Services report on Wednesday also will shed light on services in the U.S. economy. Earnings Modelo and Corona brewer Constellation Brands reports on Wednesday before the opening bell. This is the quarter that includes the benefit of Cinco De May, and we’re also expecting commentary on how the start of summer is shaping up, which plays into the current quarter. Outside of the results and current operating environment, we continue to look for improvement in the company’s struggling wine and spirits segment. While we still think the best move is to sell-off this part of the operation, improving fundamentals will be key to realizing a solid selling price for the business — or, if they continue to own it, helping the stock reach new highs. Monday, July 1 10:00 a.m. ET: ISM Manufacturing Tuesday, July 2 10:00 a.m. ET: JOLTS Job Opening Before the bell: MSC Industrial Direct (MSM), Radius Recycling (RDUS) Wednesday, July 3 8:15 a.m. ET: ADP Employment 8:30 a.m. ET: Initial Jobless Claims 10:00 a.m. ET: Factory Orders 10:00 a.m. ET: ISM Services 2:00 p.m. ET: Federal Open Markets Committee Minutes Before the bell: Constellation Brands (STZ) Thursday, July 4 U.S. stock market closed for Fourth of July holiday Friday, July 5 8:30 a.m. ET: Nonfarm Payrolls (Jim Cramer’s Charitable Trust is long STZ. See here for a full list of the stocks.) 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Wall Street ended a strong first half of the year on a somewhat sour note, with all three major U.S. stock averages closing lower Friday after a higher open. The Nasdaq inched up 0.24% for the week as tech bounced back. Meanwhile, the S&P 500 and the Dow Jones Industrial Average declined 0.1% over the past five sessions.
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