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Navigating the Markets: July 10th-14th

Last week was a holiday-shortened trading week, but there was still plenty of data to digest and plenty more to cover in the week ahead.

Let's dive in!

The Big Picture

Last week we saw data that job openings fell while jobless claims continue to move higher. The data from the labor market has been volatile, though. Making an assessment from a single data point with all of that noise is proving to be somewhat challenging.

Source: Edward Jones

Suffice it to say, with the number of hours worked falling and wage growth decelerating, there are some initial signs of softening.

Most of that softness is evident in manufacturing, however, as services continue to hire and expand.

Source: Edward Jones

One bright spot in the data is that prices paid continue to decelerate for services and are falling for manufacturers. That could help to provide some relief for inflationary pressure.

Source: Edward Jones

Treasury yields are continuing to rise, particularly on the 2-year note, as the Fed's mantra of "higher for longer" is taken a bit more seriously. Nevertheless, Fed funds futures continue to discount the probability of a second additional hike after July.

Source: Edward Jones

Earnings estimates halted their decline after the first quarter proved to be better than expected. But we remain in an earnings recession with S&P 500 company earnings falling for two quarters in a row year-over-year.

Earnings growth is projected to be deeply negative for energy, materials, and healthcare, with bright spots potentially within consumer discretionary and communication services.

Earnings season is set to kick off this Friday with JP Morgan and other money center banks reporting. Financials are expected to show modest growth.

Meanwhile, at the Atlanta Fed, the GDPNow model is forecasting that Q2 GDP perks up above 2% after the latest slew of economic data. Some of which was better than expected.

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