The U.S. stock market will probably get off to a soft start to today, as the month of August unfolds. Overseas, the markets across Europe managed to make some progress, but on our shores, the equity futures are currently down about 10 points.
On the economic front, a couple of widely followed reports are scheduled for this week. Today, the Institute for Supply Management (ISM) Manufacturing Index for the month of July will be released, along with the latest monthly construction spending figures. On Wednesday, we will get a look at factory orders for the month of June. Meanwhile, the big news will take place later in the week. On Friday morning, the government will deliver the July employment report. Economists currently expect that roughly 250,000 jobs were added to the economy over the past month, while the unemployment rate stayed near the 3.6% mark. In addition, the change in average hourly wages will be followed, as inflation remains a key concern for investors. Of note, the monthly employment report is closely watched by the Federal Reserve, and investors will also likely be paying close attention to this issuance.
In the corporate arena, the second-quarter earnings season has been somewhat mixed, so far. However, a number of widely-followed corporations have managed to report respectable numbers, and investors seemed satisfied, given the challenging environment. Today, we get a look at results from Activision Blizzard (ATVI), an important name in the digital gaming arena. Later in the week, we will receive reports from Caterpillar (CAT), the world’s largest manufacturer of earthmoving equipment. In addition, Square (SQ), a leader in financial technology, and CVS Health (CVS), a sizable drug store retailer, will weigh in with their numbers.
From a technical perspective, the stock market has managed to firm up over the past few weeks. Market breadth has improved, with broader participation across the various equity sectors. Specifically, investors now seem more willing to rotate capital into the technology, consumer, and financial issues. In contrast, a few months ago the energy and utility stocks were the only names that received much attention. Looking ahead, it remains to be seen if the bulls will be able to maintain the upper hand, and drive the broader market higher from here. Of note, stocks have managed to rally lately, but the environment had been quite complicated, and has been dominated by major economic themes and the Federal Reserve’s evolving policies.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
