This week's update highlights the cooling of the U.S. labor market, mixed economic signals from various regions, and notable movements in global stock markets.
United States
- The S&P 500 Index continued to climb to record highs, although the market’s gains remained notably narrow.
- Growth shares outperformed value stocks by 4.15 percentage points, while small- and mid-cap benchmarks recorded losses.
- The Nasdaq Composite ended the week 73.71% off its lows since the market began its rebound in mid- to late-2022, while the Dow Jones Industrial Average had gained 32.79%.
- Markets were closed Thursday in observance of the Independence Day holiday.
- Lower interest rate expectations, driven by signs of weakening growth and easing inflation pressures, favored growth stocks.
- The ISM posted its lowest reading of manufacturing activity (48.5) since February, indicating contraction.
- The ISM’s gauge of current services sector activity dropped from 53.8 in May to 48.8 in June.
- The Labor Department’s JOLTS report revealed job openings rose slightly to 8.14 million in May.
- ADP’s tally of private sector job growth fell from 160,000 in May to 150,000 in June.
- The official jobs report showed June job gains fell to 206,000, with the unemployment rate ticking higher to 4.1%.
- Annual wage inflation fell to 3.9%, indicating further moderation in wage pressures.
- Fed Chair Jerome Powell’s remarks at a European banking conference reassured investors about progress in reducing inflation.
Market Indexes Changes
- DJIA: 39,375.87 (+257.01, +4.47% YTD)
- S&P 500: 5,567.19 (+106.71, +16.72% YTD)
- Nasdaq Composite: 18,352.76 (+620.16, +22.26% YTD)
- S&P MidCap 400: 2,895.80 (-34.29, +4.11% YTD)
- Russell 2000: 2,026.73 (-20.96, -0.02% YTD)
Europe
- The pan-European STOXX Europe 600 Index ended 1.01% higher.
- France’s CAC 40 Index climbed 2.62%, Germany’s DAX gained 1.32%, and Italy’s FTSE MIB rose 2.51%.
- The UK’s FTSE 100 Index added 0.49%.
- In the UK, the Labour Party won the general election with a large majority.
- ECB President Christine Lagarde struck a slightly hawkish tone at the ECB’s annual retreat in Portugal.
- German manufacturing weakened unexpectedly, with orders falling 1.6% and industrial production contracting 2.5%.
- French industrial output declined by 2.1%.
Japan
- Japan’s stock markets gained ground, with the Nikkei 225 Index climbing 3.36% and the TOPIX Index advancing 2.65%.
- Both indexes hit all-time highs during the week, partly due to the weak yen.
- The yield on Japan’s 10-year sovereign bonds climbed to about 1.1% before easing.
- Data indicated an average wage increase of 5.1%, the biggest uptick in 33 years.
- Household spending declined 1.8% year over year in May.
- Japan’s first-quarter GDP was revised lower to a 2.9% year-over-year contraction.
China
- Chinese equities fell as underwhelming manufacturing data reinforced concerns about the slowing economy.
- The Shanghai Composite Index and the CSI 300 both registered modest losses for the week.
- Hong Kong’s benchmark Hang Seng Index gained 0.46% during a holiday-shortened week.
- China's manufacturing PMI reached 49.5 in June, unchanged from May, indicating contraction.
- The nonmanufacturing PMI rose to 50.5, down from 51.1 in May.
- The Caixin/S&P Global survey of manufacturing activity edged up to 51.8 in June.
- The value of new home sales by the top 100 developers fell 17% in June from the prior-year period.
Other Key Markets
- In Turkiye, headline inflation increased at a month-over-month rate of 1.6% in June, below expectations.
- In Poland, the central bank kept its key interest rate at 5.75%, expecting consumer price growth in the coming quarters.
