The Buzz on Business for Monday, July 1^st, 2024

Stocks and Bonds opened higher then sold off throughout the day. And we confess to being a bit perplexed as Friday unfolded. The economic data was pretty good—we’ll get into the numbers in just a minute—and the sell-off, especially the sell-off in the long end of the bond market seemed, well, unfounded and out of place.

We saw one analysis that creditably claimed that Thursday night’s Presidential Debate created political uncertainty which sent traders to the exits. We’re not so sure and think that movements in the markets which are attributed to politics and the law are often overstated. Still it was an interesting thesis and one we will continue to think about and watch.

In this case, perhaps, the more likely explanation is that it was a Friday before a holiday week and some traders just left work early.

Stock Market Report

Stocks opened higher but sold off most of the day and on good volume on Friday but, inexplicably, advancing stocks led decliners.

• The Dow Jones Industrial Average closed at 39, 199, off forty-five points or one tenth of one percent.
• The S&P 500 was off four-tenths, that’s twenty-two points on the S&P and it closed at 5,460.
• The NASDAQ Composite had a tougher go of things. It was down almost three quarters of one percent and closed at 17,733, off 126 points.
• The Russell 2000 broke the trend. The small caps were up 0.50%, or nine points and start the week 2,048.

Bond Market Report

As we said, rates were up sharply on Friday.

• The yield on the 2-year treasury was up four basis points and it closed at 4.756%.
• The 20-year was up thirteen ticks and closed at 4.662%

Could we be seeing the long inverted yield curve beginning to right itself?

Oil, Gold, and Bitcoin

• Oil was down $0.20 and a barrel now trades hands at $81.54.
• Gold was down a minuscule $1.30 and a troy ounce will now set you back $2,335.50.
• And Bitcoin was off $1,330.84 and at 4:00 PM ET stood at $60,084.61.

Economic Data Mixed But Good News on Inflation

As has become the pattern in recent weeks and months, the economic data that was released on Friday was mixed but, it wasn’t bad, especially on inflation. It wasn’t great but okay. And so the sell off in stocks came as a bit of a surprise.

All the PCE numbers hit their marks on Friday and all show, or at least support the claim that inflation is in retreat.

The closely watched, MoM Core PCE for May came in at 0.10%, well within the Fed’s target. Very good news, indeed.

The balance of the economic reports showed, to us, an economy that might, could benefit from a rate cut.

The Institute of Supply Management’s Chicago Purchasing Managers Index exceeded expectations.

Likewise the University of Michigan Consumer Surveys. We don’t put much stock in surveys. They’re essentially polls. But these numbers all look pretty good.

Not so much the Atlanta Fed’s GDP Now, which missed consensus expectations and show an economy that is growing slower than expected. Could that number improve with lower interest rates? Maybe. In the face of softening inflation rates, probably.

In this holiday shortened week we will get data from manufacturing, which is forever breaking our heart. And on Friday, we get the Jobs Report for June. Expectations are for the unemployment rate to hold steady at 4.0%

Enjoy your holiday. Enjoy your summer but don’t forget to keep it right here on the Buzz.