As the week goes on, financial markets are looking ahead to key economic reports. These quarterly earnings announcements have the potential to be extremely market moving to investor sentiment. The release of the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. We expect this year’s report to provide essential context on the changing health of the labor market. Analysts expect this data to offer a clearer picture of job availability and employee turnover amidst ongoing economic recovery efforts.
Coming on Wednesday, ADP’s private payrolls report would provide an important third act, providing another key glimpse into national employment trends. Economists surveyed by FactSet are forecasting the U.S. economy to have added 115,000 jobs in July. This figure is likely to have a big impact on market reactions. While we expect the unemployment rate to tick up a bit to 4.2%, that’s from 4.1%. This notable increase is a sign of the continued realignment of our labor market.
Coming up later this week, the first look at initial jobless claims on Thursday. We expect this update to be of service as you take stock of the new employment landscape. The week will finish out with the all important July jobs report on Friday. This report has the potential to make a powerful impact on the debate over economic policy.
Indeed, more than 150 S&P 500 companies are scheduled to report quarterly results this week. This sudden surge in announcements is only going to increase market volatility. Some of the usual suspects among notable tech companies are lining up to demonstrate. Meta Platforms and Microsoft lead the pack on Wednesday, with Amazon and Apple on deck Thursday.
Stock market futures suggest a very bullish outlook as investors look forward to these moves. Futures linked to the Dow Jones Industrial Average rose 180 points, or 0.4%, indicating early euphoria. At the same time, the Nasdaq Composite added 0.24%, ending at 21,108.32 for its 15th record close of 2017. The Dow ended the last trading day higher by 208.01 points, or 0.47%, closing at 44,901.92. The S&P 500 was up 0.40% to finish at 6,388.64. That would be its fifth day in a row of record closing highs and the 14th record close of the year!
In addition to earnings and employment data, the Federal Reserve will hold its two-day policy meeting this week, concluding on Wednesday. Investors are looking to catch a hint of any change in the massive monetary policy that has taken place.
This incredible upward momentum in markets cannot be explained by any one reason. Nick Savone from Morgan Stanley’s Institutional Equity Division noted, “A healthy plethora of earnings beats, positive developments in U.S.-Japan trade relations, strong capex commentary, and a bullish ‘AI Action Plan’ kept the enthusiasm of weeks’ past stronger than ever.”
Indeed, President Donald Trump just announced a decidedly optimistic trade deal with the European Union. The deal contains a poison pill in the form of a 15% tariff on an array of imports. This new development could further sway investor sentiment as markets continue to react to the changing landscape of international trade.