Dow Makes New All-Time Highs For Second Day In A Row, Nasdaq And S&P 500 Close Solidly HigherStocks closed higher yesterday with all of the major indexes in the green. The Nasdaq led the way with 1.12%, followed by the S&P 500 with 0.72%, and the Dow with 0.29%. The Dow made its second consecutive new all-time high and close in the process. Many big tech and AI-related names bounced back yesterday, helping drive the Nasdaq higher. Last week's Employment Situation Report, which came in a bit lighter than expected (57,000 new jobs were created in June vs. the expected 114,000), was viewed as good enough to show an expanding workforce. Private sector jobs at 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 whereas the Fed doesn't have to keep watching it. Remember, the Fed has a dual mandate – stable prices (read moderate inflation), and maximum employment. The previous few employment reports, which have come in better than expected, have led some to believe the Fed would pivot back to focusing more on inflation (which they kind of have). I mean, the recent FOMC Minutes showed 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, the labor has once again become a positive input for a rate cut rather than a rate increase. In other news, yesterday's PMI Composite report put the Composite Index at 51.9 vs. last month's 52.2 and views for the same. The Services Index was at 51.2 vs. last month's 51.3 and estimates for 51.3. The ISM Services Index was at 54.0 vs. last month's 54.5 and forecast for 54.1. Today, the only report on the docket is the International Trade in Goods and Services report. But the main event will likely be Wednesday's Fed Minutes from June's FOMC Meeting. June's meeting was also the first one for new Fed Chair Kevin Warsh. While he said he didn't participate in the Summary of Economic Projections (SEP), which provides an outlook for GDP, the unemployment rate, inflation, and the Fed Funds rate, it could shed further insight of what the other members were thinking. Next week, however, 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 big banks start reporting. While Tech is the top weighted sector in the S&P at roughly 32%, Financials are number two with roughly 13% weighting. So all eyes will be on financials next week to see how Q2 earnings look. But if they come in anywhere near expectations (Q2'26 S&P earnings growth are forecast at 22.3%, with Q3'26 at 19.8%, and Q4'26 at 21.6%), this earnings season could be yet another stellar one. And that's great news, since stocks typically go up during earnings season. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research |
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