The S&P 500 (SPX) saw a decline this week, ending a three-week winning streak. The Dow Jones Industrial Average (DJIA) and the Nasdaq-100 (NDX) also experienced small losses, while the Nasdaq Composite (NDAQ) managed to eke out a slight gain. Despite some turbulence, the benchmark indexes finished June with strong gains, wrapping up a successful first half of the year.
Stocks closed lower on Friday due to concerns surrounding political uncertainty following the U.S. presidential debate. Additionally, initial positive reactions to weaker-than-expected PCE inflation numbers faded throughout the day. The Federal Reserve has emphasized the need to see consistent declines in inflation before considering an interest-rate reduction. Economic data remains mixed, with the GDP for Q1 2024 coming in slightly stronger than expected, while consumer spending and personal income figures also presented a mixed picture.
The economy appears to be heading towards a “soft landing,” potentially paving the way for an interest-rate cut in September. However, the job market report due this Friday will provide crucial insights, as consumer spending heavily relies on income growth. Evidence of labor-market softening may be necessary to support expectations for a rate cut in September.
This week, investors should pay attention to four key economic events that could impact their portfolios. These include June’s ISM Manufacturing PMI and ISM Services PMI, as well as the Nonfarm Payrolls, Unemployment Rate, and Average Hourly Earnings reports for June. These reports provide valuable insights into the state of the U.S. economy and are closely monitored by policymakers and analysts.