Big Three Indexes Finished Higher Last Week, Dow Closed At New All-Time HighsStocks closed mixed on Thursday and for the week. The big three indexes (Dow, S&P 500 and Nasdaq) were all up for the week with the Dow making a new all-time high in the process. It was the fourth up week in a row for the Dow. And third up week out of four weeks for the S&P and Nasdaq. The small-cap Russell 2000 and mid-cap S&P 400 were both lower for the week. But the Russell has also put in 3 up weeks out of the past 4 weeks, while the S&P 400 is up 2 weeks out of the last 4. It should also be known that the Russell and S&P 400 have been the leaders this year with outsized gains of 20.7% and 15.1% respectively. The Dow is up 10.1% YTD, while the tech-heavy Nasdaq and S&P 500 are up 11.2% and 9.32%. Thursday's Employment Situation Report came in a bit lighter than expected, but good enough to show an expanding workforce. The headline numbers showed there were 57,000 jobs created in June (49,000 in the private sector and 8,000 in the public sector), vs. the consensus for 114,000 jobs (123,000 private and -9,000 public). The unemployment rate ticked lower to 4.2% vs. last month's 4.3% and views for the same. The participate rate declined to 61.5% vs. last month's 61.8% and estimates for 61.8%. Additionally, April was revised down by -31,000 jobs to 148,000 (from 179,000), while May was revised lower by -43,000 to 129,000 (from 172,000). The biggest job gains came from the following industries: Professional and Business Services were up 36,000 jobs; Social Assistance jobs were up 25,000; and Health Care was up 22,000. On the downside, Leisure and Hospitality declined by -61,000 jobs. It noted weaker than usual seasonal hiring. But also noted employment in the industry this year has shown little net change. The total private sector labor market in June (49,000) came in just under the trailing-twelve-month (TTM) average of 51,250. Strong enough to come close to the average, but not so strong as to blow it away. That still doesn't mean there's enough reason for the Fed to cut rates. In fact, the Fed has been talking about the potential to raise rates if inflation remains stubbornly high. But with oil dropping, inflation should begin doing the same. And with jobs running below trend (remember, the Fed’s dual mandate is stable prices (read moderate inflation), and maximum employment), the labor market remains a positive input for a rate cut rather than a rate increase. In other news, Weekly Jobless Claims were down -1,000 to 215,000 vs. estimates for 220,000. And Factory Orders were off -1.3% for m/m (for May) beating the forecast for -2.0%, but down from April's upwardly revised 5.3% (from 4.8%). Relatively light week this week in terms of economic reports. The main event will likely be Wednesday's Fed Minutes from June's FOMC Meeting. Next week heats up with another look at inflation with the Consumer Price Index (CPI – retail inflation), and the Producer Price Index (PPI – wholesale inflation). And Q2'26 earnings season will unofficially begin when the big banks start reporting. In the meantime, the markets will be watching developments in the Middle East and the Strait of Hormuz. The markets will also be watching big tech and AI related names to see if it can shrug off recent volatility. The first half of 2026 was a solid one. I'm expecting the second half to be even better. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research |
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