After a choppy start to the holiday-shortened week, stocks rallied some 1 ½% on Friday as a strong jobs report boosted hopes that markets would return to a ‘goldilocks’ environment where the economy is growing just enough to help drive earnings growth, but remains tepid enough to keep inflation at bay and the Fed from raising interest rates. Markets are entering a seasonally difficult period, and second quarter earnings season is just getting on its way. Market participants will likely focus on this week’s labor reports as well that Thursday’s Bank of England announcement – the first scheduled news release since the Brexit vote.
Volatility is likely to remain at the forefront, keeping hedging costs high. On the positive side, markets closed on a relatively strong note on Friday, however they failed to set new highs, meaning that they remain in their trading range. Market participants will likely focus on forward looking statements by corporate chieftains during the current earnings season to discern how the second half of the year may play out.
This Week’s Market Moving events:
Monday: U.S. Labor Market Conditions report
Tuesday: Redbook, JOLTS (Job Openings and Labor Statistics Report), Wholesale Trade
Wednesday: Import / Export Prices, Atlanta Fed Business Inflation Outlook survey, Beige Book
Thursday: Bank of England Announcement, PPI, Jobless Claims, Chinese GDP and Retail Sales
Friday: Industrial Production, Retail Sales, Business Inventories, Consumer Sentiment