Stocks & Bonds Gain Albeit Amongst Softer Economic Data

Good morning, 

The Dow (+0.7%), S&P 500 (+2.0%), and NASDAQ (+3.5%) experienced strong gains during the holiday-shortened week.  Meanwhile, taxable bonds were up about 0.3% - 0.6% and tax-free municipal bonds finished the week flat to up around 0.1%.  The 10-year Treasury bond yield fell 0.16% to end the week at 4.28%, which helps explain why bonds performed positively for the week.

Last week we saw a few key reports come out with the ISM Manufacturing, ISM Services, and Labor Report all being released. Both the ISM Manufacturing and ISM Services reports showed results below the 50-demarcation line, which economists say depicts a contraction of the US economy.  The Manufacturing report has been trending around this middle ground between expansion and contraction for some time now, but the Services report has now fell into contraction territory for the second time in the last three months. With Services making up the larger share of the economy, a continued slowdown would be more concerning and give fuel to investors with hopes of Fed interest rate cuts coming sooner than later. 

The US economy added 206,000 jobs in June, which was slightly better than expected. However, the unemployment rate rose to 4.1%, which is the highest level since November 2021.  This report shows that the labor market is cooling but still looks healthy. While one report does not make a trend, this fits in with the softer Manufacturing and Services reports and gives additional cause for the Fed to cut interest rates. This Thursday and Friday, investors will get to see if inflation is continuing to cool with the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) reports. 

Have a great week, and stay cool out there! 

^{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.} 

^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}