The U.S. stock market is poised for a positive opening today, as traders look ahead to a new week on Wall Street. Overseas, the markets in Europe have been putting in a constructive session. At home, the equity futures are ahead roughly 20 points, which is a positive indication, in our view.
In the economic arena, traders may still be digesting the July employment report that was released at the end of last week. To review, roughly 528,000 jobs were added to the economy last month, and the unemployment rate moved down to the 3.5% level. These numbers were quite strong, and some investors may now be concerned that the Federal Reserve will continue to take aggressive action if inflation does not show meaningful signs of cooling. On a related note, we will receive a couple of key reports on inflation this week. Specifically, the Consumer Price Index (CPI) for the month of July will be released on Wednesday, followed by the monthly Producer Price Index (PPI) on Thursday. Investors will clearly want to see that inflationary pressures are easing at this point. It is encouraging that many widely used commodities, including gasoline, have started to move down in price. Elsewhere, the consumer will also be in the spotlight this week. On Friday, the University Of Michigan will publish its consumer sentiment index for the month of August. Investors will likely be paying some attention to this report, as the consumer is vital to the health of the nation’s economy.
In the corporate arena, the second-quarter earnings season remains a work in progress. Most of the large companies have already weighed in with their numbers. So far, the results have been uneven, with companies noting challenging conditions, but still delivering respectable results. Today, we get a look at a report from American International Group (AIG), a widely held name in the insurance industry. Tuesday, a couple of large companies in the hospitality industry, Hyatt Hotels (H) and Wynn Resorts (WYNN), are slated to deliver their numbers.
From a technical perspective, the stock market made notable progress during the month of July, and it is probably too early to tell how August will unfold. The S&P 500 Index is currently sitting just above the 4,100 mark, and will hopefully find some support at this level. However, the global market environment remains complicated, and it remains to be seen if the bulls can remain in control. No doubt, much will depend on the Federal Reserve’s ability to put a damper on inflation without derailing the economy.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
