Jobs Report into Earnings Season – Monday Morning Market Memo – July 11, 2022

Jobs Report into Earnings Season – Monday Morning Market Memo – July 11, 2022

The June Jobs Report released last Friday morning came in stronger-than-expected.  The United States Department of Labor reported the economy added 372,000 jobs last month, nicely ahead of the 250,000 number expected by the financial markets.  The unemployment rate held steady at 3.6 percent, in line with estimates.  While the healthy jobs report is a positive sign for the economy, it also bolsters Federal Reserve resolve to continue with aggressive interest rate hikes to fight inflation.

Currently, the CME FedWatch Tool indicates a 100% probability the Fed will hike rates by at least ¾ point on July 27th, along with a 100% chance they will raise rates by at least ½ point in September.  After the stock market digested a strong jobs number last week, increased odds of rate hikes, and continued worries over recession and inflation – the major indices all posted gains.  The Dow Jones Industrial Average gained .8%, the Standard & Poor’s 500 Index added 1.9%, and the NASDAQ Composite jumped 4.6%.

Looking to the week ahead, second-quarter earnings season “officially” begins, with several major banks scheduled to report results, including JPMorgan ChaseCitigroupWells Fargo, and Morgan Stanley.  Away from financials, we’ll also get numbers from PepsiCoDelta Air LinesFastenal, and UnitedHealth Group.  Looking at earnings expectations in general: For the second quarter of 2022, the estimated earnings growth rate for the S&P 500 is 4.3 percent – according to data from FactSet.

Another focal point in the week ahead is the June Consumer Price Index (inflation) report on Wednesday, where consensus estimates are for an increase of about 1%.  Overall on the markets, our expectations are still for continued outsized volatility, as the same macro issues of inflation, recession fears, rising rates, supply issues, and lockdowns in China all continue to push/pull the market.  As always, don’t hesitate to contact us with any questions you may have, or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC