Following the July 4th holiday, the Employment Report indicated a strong but cooling labor market. After the report, the probability of a 0.25% rate cut in September increased to 75%. The prospects of lower interest rates pushed the S&P 500 and Nasdaq to close at all-time highs, up 17.57% and 22.73% YTD, respectively.
This week, Delta (DAL), Pepsi (PEP), and big banks JP Morgan (JPM), Citi (C), and Wells Fargo (WFC) kick off the second quarter corporate earnings season. The S&P 500 index trades at a forward earnings multiple of approximately 21.4 compared with a five-year average of 19.7, according to FactSet. Better-than-expected Q2 corporate earnings could support current valuations and move stock prices higher. Alternatively, earnings misses would have the opposite effect. On the economic front, June’s Consumer Price Index report on Thursday should show little change from the previous month.
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Here’s to a great week ahead!
Thank you,
David Bennett