Stocks ended the holiday-shortened week with strong gains. The S&P 500, Nasdaq, and Nasdaq hit new highs on Friday, while the Dow Jones posted a solid weekly gain, though still about 1.5% below its May record high.
June’s job market report boosted stocks, suggesting a "Goldilocks economy." Over 200,000 positions were added, but signs of cooling emerged with the unemployment rate rising to 4.1%, the highest since November 2021, and wage growth slowing to a three-year low. May’s hiring numbers were also revised lower.
These signs of a weakening job market and easing wage pressures increased investor bets on a September rate cut. However, Wall Street analysts caution against overly optimistic bets, noting the job market remains tight. Recent data supports the Fed’s view of steadily declining inflation in a cooling economy.
This week, investors will watch the June CPI report on Thursday and Jerome Powell’s testimony before Congress on Tuesday for further insights into the Fed's economic assessment and policy outlook.
🇺🇸 Fed Chair Powell Testimony — July 9-10, at 17:00 GMT+3
This business week kicks off with a significant event: Fed Chair Powell's Testimony, taking place over two consecutive days. This is colloquially known as the Humphrey-Hawkins testimony. During this testimony, the Fed reports on its monetary policy and economic goals to Congress.
Powell will:
Provide an overview of current economic conditions and update the Fed's outlook for the economy, focusing on assessments of inflation and employment.
Discuss the Fed's current monetary policy stance, including interest rates.
Take questions from members of Congress, covering a range of topics such as the performance of specific economic sectors, regulatory policies, and global economic issues.
We may receive signals regarding future rate cuts, which will inevitably impact the markets. Therefore, stay alert and pay attention to the outcomes.
🇬🇧 Manufacturing Production m/m — July 11, at 09:00 GMT+3
The next significant release will be the Manufacturing Production data from the UK for the previous month. Analysts forecast a decrease to 0.2%, down from the previous figure of 1.2%.
It is uncertain how this potential decline might impact assets such as the GBP/USD or the FTSE 100 index. However, historically in trading, there have been instances where weaker-than-expected manufacturing data have led to volatility in currency and equity markets. Traders should monitor the release closely, as unexpected results could lead to sharp movements in the GBP/USD pair and fluctuations in the FTSE 100 index.
🇬🇧 GDP m/m — July 11, at 09:00 GMT+3
The week continues with another crucial release for the British economy: the GDP data. Analysts are also expecting a decrease here, down to 0.0%. This means that the country's economy did not grow over the past month, which could also affect the British pound and related currency pairs and assets.
It is essential to monitor this release, as stagnation in economic growth can lead to volatility in the GBP and associated assets. Historically, flat or negative GDP growth has prompted reactions in the forex and equity markets, influencing trading strategies and investment decisions.
🇺🇸 CPI and Core CPI m/m — July 11, at 15:30 GMT+3
The next significant release to watch is the U.S. CPI and Core CPI m/m data. The monthly CPI is expected to come in slightly higher than the previous figure, at 0.1% compared to 0.0%. The Core CPI is anticipated to remain steady at 0.2%.
These releases can have a substantial impact on major indices such as the Nasdaq, SPX500, and Dow Jones, as well as the US Dollar. Higher-than-expected inflation data can influence the Federal Reserve's monetary policy decisions, potentially leading to increased market volatility.
Keep a close eye on this release, as it may drive significant movements in both the stock and forex markets.
🇺🇸 PPI and Core PPI m/m — July 12, at 15:30 GMT+3
The week concludes with the release of the U.S. PPI and Core PPI m/m data. Notably, the markets are anticipating an increase in PPI to 0.1%, up from the previous -0.2%.
This release is particularly significant because Producer Price Index (PPI) measures the average changes in selling prices received by domestic producers for their output. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. An uptick in PPI can suggest increasing inflationary pressures, which might influence the Federal Reserve's decisions regarding interest rates.
The anticipated rise in PPI this month could therefore cause volatility in markets, especially in indices like the Nasdaq, SPX500, and Dow Jones, as well as the EUR/USD.
That's it for this week! 👋
IMPORTANT NOTICE: Any news, opinions, research, analyses, prices or other information contained in this article are provided as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and therefore, it is not subject to any prohibition on dealing ahead of dissemination. Past performance is not an indication of possible future performance. Any action you take upon the information in this article is strictly at your own risk, and we will not be liable for any losses and damages in connection with the use of this article.
RISK WARNING: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. A high percentage of retail client investors lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
NAGA is a trademark of The NAGA Group AG, a German based FinTech company publicly listed on the Frankfurt Stock Exchange | WKN: A161NR | ISIN: DE000A161NR7.
The website is operated by NAGA Capital Ltd which is authorised and regulated by the Financial Services Authority Seychelles (FSA) under licence No. SD026. The registered address of CT House, Office 9A, 2nd Floor, Providence, Mahe, Seychelles. Tel: +248 4373121
The group also includes NAGA Global (CY) Ltd, with registered address at Nikokreontos 2, NICE DREAM, 6th floor, Flat/Office 601, 1066, Nicosia, Cyprus. NAGA Global (CY) Ltd is wholly owned by The NAGA Group AG.
RISK WARNING: Derivatives are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how derivatives work and whether you can afford to take the high risk of losing your money. This is not investment advice. Trading with NAGA Trader by following and/or copying or replicating the trades of other traders involves high levels of risks, even when following and/or copying or replicating the Lead Traders. Such risks include the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Before making an investment decision, you should rely on your own assessment of the person making the trading decisions and the terms of all the legal documentation.
Restricted countries: NAGA Capital Ltd does not provide services for the residents of certain countries, such as Afghanistan, Albania, American Samoa, Anguilla, Australia, Austria, Barbados, Belarus, Belgium, Bermuda, British Indian Ocean Territory, Bulgaria, Burkina Faso, Canada, Cayman Islands, Central African Republic, Christmas Island, Cocos (Keeling) Islands, Congo, The Democratic Republic of the, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Falkland Islands (Malvinas), Finland, France, Germany, Gibraltar, Greece, Guam, Haiti, Heard Island and McDonald Islands, Hungary, Iceland, Iran, Islamic Republic of, Ireland, Isle of Man, Israel, Italy, Jamaica, Japan, Jersey, Korea, Democratic People's Republic of, Latvia, Libyan Arab Jamahiriya, Liechtenstein, Lithuania, Luxembourg, Mali, Malta, Montserrat, Mozambique, Myanmar, Netherlands, New Zealand, Norfolk Island, Norway, Palestinian Territory, Occupied, Pitcairn, Poland, Portugal, Romania, Russian Federation, Saint Helena, Ascension and Tristan Da Cunha, San Marino, Senegal, Serbia, Slovakia, Slovenia, Somalia, South Georgia and the South Sandwich Islands, South Sudan, Spain, Sri Lanka, Sweden, Switzerland, Syrian Arab Republic, Trinidad and Tobago, Tunisia, Turks and Caicos Islands, Uganda, Ukraine, United Kingdom and any other countries where the citizens have British proof of identity (i.e. British Virgin Island, Gibraltar, Isle of Man etc.), United States, U.S. Minor Islands, Vanuatu, Virgin Islands, British, Virgin Islands, U.S., Yemen, and Zimbabwe.