Yesterday, I spent a lot of time talking about how the jobs report was likely to meet expectations, but the underlying assumption was that the risks were to the downside. I talked about how, if job growth fell short, it was likely due to a lack of workers rather than a lack of jobs. I did mention the report could surprise to the upside, but didn’t give it a lot of attention. So when I looked at the actual data this morning, I can summarize my reaction with one word: Wow!
With all the concerns around a recession, one of the key data points that says the economy is still growing has been the jobs numbers. With companies adding hundreds of thousands of jobs per month, with quit rates still very high, with millions more jobs available than we have ever seen before, the jobs market still looks like boom times—not a recession. The question, of course, is how long can that good news continue? This Friday’s jobs report will give us the most current answer.
July was a surprisingly good month for financial markets, with the greatest monthly gains since 2020. The S&P 500 was up 9.22 percent during the month, the Dow Jones Industrial Average was up 6.82 percent, and the Nasdaq Composite was up 12.39 percent. While all three indices are still down for the year, last month reversed a significant share of the losses. Internationally, developed markets rebounded, although emerging markets didn’t do as well as expected.
After a terrible start to 2022, markets rebounded in July. U.S. and developed international markets were up by 5 percent or more, with only emerging markets trailing. The primary driver here was the Fed. It has raised interest rates close to a neutral level, and markets are anticipating the worst of the tightening cycle has passed. But with the U.S. economy contracting for the second quarter in a row, can the rebound continue? Stay tuned to my latest Market Thoughts video to find out.
Each week, we break down the latest U.S. economic reports, including what the results mean for the overall health of the economy. Here, you will find how economists’ forecasts compare with actual results, key takeaways to consider, as well as a list of what’s on tap for the week ahead.
Energy was the top-performing equity sector in the S&P 500 during the first half of 2022, with a total return of 31.8 percent. Crude oil and natural gas fundamentals were favorable heading into 2022 amid strong demand, low inventories, and limited spare capacity globally. Since the pandemic recovery, demand has exceeded supply for both commodities. Furthermore, Russia’s invasion of Ukraine accelerated the supply constraints resulting in spiking energy prices.