The U.S. stock market seems set for a constructive start today, as we wrap up the month of July. As we were preparing this report, the S&P 500 Index futures were ahead about six points (0.15%) in pre-market trading. This week, investors will receive numerous corporate profit reports, along with several notable economic releases.
In economic news, today should be relatively uneventful. Tomorrow, the ISM (Institute for Supply Management) Manufacturing Index for July will be released, along with the latest construction spending figures. On Wednesday, the Automatic Data Processing (ADP) employment report for July will be published, providing a detailed view of the private-sector job market. The remainder of the week will also be busy, with several items scheduled. However, the main event will take place on Friday morning, when the government delivers the employment report for July. Most analysts think roughly 200,000 jobs were added to the economy during the past month, while the headline unemployment rate held steady at the 3.6% mark. Investors will also be looking to see if wage pressures have started to ease, as this has been a concern for the Federal Reserve.
In the corporate arena, second-quarter earnings season is now in full swing. Today will be somewhat quiet. However, tomorrow Caterpillar (CAT) and Pfizer (PFE) will present their results. Later in the week, we will hear from Apple (AAPL) and Amazon.com (AMZN). At this point, roughly half of the companies in the S&P 500 Index have weighed in with their reports. Although profits have remained under pressure during the quarter, the numbers have been a bit better than had been expected. Moreover, the outlook for the second half of the year appears encouraging, which is of importance since many investors have voiced concerns about a possible recession and elevated equity valuations.
From a technical perspective, the S&P 500 Index continues to press ahead. The broader market average is now sitting not far from the 4,600 level. This area may be worth watching, as it corresponds to a large round number and could hold “psychological” importance for investors and various media outlets. Elsewhere, from a sector vantage point, the technology stocks provided much of the leadership over the past year, while other sectors languished. Fortunately, we are now starting to see broader participation, with investors moving capital into other equity groups, including some battered financial issues. – Adam Rosner
At the time of this article’s writing, the author had a position in Amazon.com.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
