Despite lingering geopolitical tensions and emerging signs of a potential economic slowdown, equities continued their upward climb last week. In our post last Monday, we noted that historically, stock markets tend to sell off during war-related events. However, we expressed cautious optimism that this particular situation might instead pave the way for de-escalation. So far, that outlook has held up.
Following the U.S. airstrikes on Iran’s nuclear facilities, the response was surprisingly measured. A limited retaliation by Iran was followed by an announced ceasefire with Israel. Once the ceasefire news broke, equities rallied sharply, pushing the market closer to its all-time highs.
From a technical perspective, the setup looks favorable. Momentum indicators are advancing yet remain below overbought levels. Market participation is broad, with sectors such as financials, industrials, technology, and communication services either breaking out or poised to do so.
Economic Highlights
The macro picture was mostly supportive last week. Existing home sales, durable goods orders, and jobless claims all exceeded expectations. However, not all data was positive. New home sales disappointed, and the final Q1 GDP revision came in at -0.5%, slightly below the expected -0.2%. Year-over-year GDP slowed marginally but still held at the longer-term trend of 2%.
The biggest drag on the GDP revision was a softer read on consumer spending—an unwelcome signal, likely reflecting concerns around tariffs.
This Week’s Economic Calendar
Though it’s a shortened trading week due to the holiday, we have a full slate of meaningful data ahead:
📅Tuesday:
- ISM Manufacturing Index: Expected to rise slightly to 49.5—still in contraction territory, but inching closer to the neutral 50 mark.
- JOLTS (Job Openings): Previous reading was 7.39 million.
📅Wednesday:
- ADP Employment Report: Anticipated to show a strong rebound following last month’s weak figures.
📅Thursday:
- Nonfarm Payrolls: Forecasted at 120K, down 19K from the previous month. Still considered a healthy pace of hiring.
- Unemployment Rate: Expected to edge up slightly to 4.3%.
- Average Hourly Earnings: Expected to dip modestly to a 0.3% increase.
- ISM Services Index: Expected to rise into expansion territory at 52.0.
📅Friday:
🎆Happy 4th of July! (Markets Closed)
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— HPK Provident Advisors
The opinions voiced in this material are for general information only and are 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. Economic forecasts set forth may not develop as predicted