The July’s Jobs Report, issued by the Labor Department on Friday was emphatic; the economy is beginning to struggle. Hiring trends have reiterated what economists have been predicting for several months. Job and hiring statistics appear to have been skewed, with inaccurate layoff and hiring figures for the past 3 months. All three indexes reacted on Friday with the Dow Jones Industrial Average falling 540 points. Both the Nasdaq Composite and the S&P 500 followed lower, 2.2% and !.6% respectively in a ‘sour’ market. ‘Investors and traders, for weeks, have hoped this day would not come.’ It was the worst week since ‘Liberation Day’ in early April. A rate cut now is a strong possibility for September, according to CME Group and the chances of a rate cut now are 85%, up from 38% on Thursday. Senior economist Sarah House of Wells Fargo said: “To see three months in a row of fewer than half of industries adding jobs is unprecedented outside of a recession. Businesses are ‘standing pat,’ with their head counts as they wait to see what lies ahead.” Also President Trump directed his team to fire the top official at the Bureau of Labor Statistics, after objecting to questionable data previously released. Gold futures jumped 1.7% in late Friday trading, an indication a movie to ‘safer-havens’ by investors was a move.
After a ‘brutal Friday’ and after digesting questionable hiring data Monday’s opening market was positive with the Dow Jones thrusting upward 585 points. Both the S&P 500 and Nasdaq Composite were up 1.5% and 2% respectively. “From the market’s point of view this is going to spur the Fed to action,” said Ross Mayfield, an investment strategist for Baird Private Wealth Management. Stocks opened robustly but quickly lost gains after a disappointing “Services-Sector Report” was released. All three indexes reacted, and stayed negative the rest of the day, with the Dow Jones Industrial Average losing 0.1%, both the S&P 500 and Nasdaq were down 0.5% and 0.7%, after floundering all day. “The ISM services sector index fell to 50.1 in July from 50.8 in June.” That number was well below what economists had expected via a survey by the Wall Street Journal. Many leading indicators now point to an economy that is “cooling off,” with hiring and general labor numbers that support a worsening trend. The 10-year Treasury yield finished Tuesday at 4.196%. Oil fell for the 4th straight day, down to $65.29 a barrel, as reserves began to grow worldwide. A strong rally, led by Apple helped, finish Wednesday’s indexes all higher. Many diplomatic events are at the fore as President Trump parlays his sweeping tariff plans.
The Prudent U.S. Consumer… The first 6 months this year saw a seasoned consumer emerge, battletested with years of unprecedented price increases, now gearing up to fight the never-ending surge of rising prices. Today’s consumer has become well informed, able to understand and evaluate pricing, value and affordability. According to Dirk Van de Put, Chief Executive of Mondelez International, maker of ‘Ritz Crackers’ and ‘Cadbury Chocolates’ and more, stated: “There’s a lot of consumer anxiety.” A poll conducted in May by McKinsey revealed that many consumers had cut back spending based on the severe tariff consequences. According to the Wall Street Journal, a large percentage of across-the-board price increases were not justified. (as jumping in and raising prices was “the thing to do”) P & G CEO Jon Moeller stated: “People are frustrated, and I would say understandably so, with lack of certainty.” The expensive equation becomes more complex, with the consumer bearing the brunt of our expensive economy.
RUMBLINGS ON THE STREET
Sarah House, Senior economist at Well Fargo, WSJ – “There have been a lot of points of concern. A huge share of hiring came from just a few industries. “We think things are only going to weaken from here. Yes, we’re still adding jobs, but not everyone can work in healthcare or education.”
Ross Mayfield, an investment strategist for Baird Private Wealth Management, WSJ – “As long as the big tech and AI trade has legs, the market is probably going rally to the face of economic data that might suggest otherwise.”
MIchelle Bowman, Fed Governor, WSJ – “Economic conditions are shifting. I see the risk that a delay in taking action could result in a deterioration in the labor market and further slowing in economic growth.”
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