Before The Bell
After four consecutive positive days on Wall Street during the latest five-day trading span, the bulls came into Friday with upbeat expectations of extending that winning streak to five sessions. After all, the economy was doing somewhat better and there were hopes for a deal in Congress to approve a much-needed stimulus package to help and alleviate some of the worst financial pain of the coronavirus pandemic. That illness now has infected more than five million Americans and claimed over 160,000 U.S. lives.
And the early tale of the tape looked promising, as the U.S. Government released upbeat numbers on job growth and unemployment for July. To wit, 1.8 million positions were added last month, while the jobless rate dipped from 11.1% to 10.2%. However, these numbers, albeit better than forecast, also showed that the month-to-month pickup was decelerating. Such slowing defused the rally urge, and the stock market would spend the day in an uneven pattern, with weakness in the NASDAQ countered by late strength in the Dow Jones Industrial Average.
Looking ahead to a new week now, and after the issuance of the latest headline reports on job creation, the services sector, and manufacturing activity, all of which were positive, the Street will see fewer economic reports of note released early this week. However, there still will be tomorrow's survey on the Producer Price Index to decipher and Wednesday's companion report on consumer process to examine. Neither report is likely to show much of a change in core inflation, but the headline number could climb due to the recent uptrend in oil prices.
On Friday, though, the government will release key metrics on retail sales and industrial production. These could be market moving, in particular the retail report, as it will give a telling indication about back-to-school sales. Recent months have seen some uptick in this consumer category. It also will be indicative about how restaurants are doing as the economy slowly and unevenly reopens. Meanwhile, earnings season is grinding to a halt, and, overall, it has been a better one than forecast, although profits were still way down from a year earlier.
Now, as calendar companies wind up their latest earnings season, the retailers, which typically conclude their latest quarter at the end of July, will start reporting their quarterly metrics. Elsewhere, the President has used executive orders to extend jobless benefits to millions of out-of-work Americans, as the two parties in Congress were unable to fashion a workable deal on their own. Even so, the benefits coming to the jobless will be less than previously approved in the earlier Cares Act that expired late last month.
Looking ahead to the new trading week now, we see in early going last evening that the stock futures were slipping a little after the President signed the aforementioned executive orders aimed at extending coronavirus relief. Now, after that early dip, we see that the futures are moving a touch higher ahead of the market's opening this morning on general optimism regarding earnings and the state of the economy.
– Harvey S. Katz, CFA
At the time of this article's the author did not have positions in any of the companies mentioned.
