What Might Stop Stocks From Continuing Their Ascent?
US: S&P 500 Index +1.7%, Dow +1.2%, Nasdaq +1.9%
Europe: STOXX Europe 600 +1.4%, German DAX +1.4% France CAC 40 +1.0%, U.K. FTSE 100 +2.4%
Asia: Japan Nikkei +2.20%, China Shanghai Composite +1.1%, Korea KOSPI -0.9%
Rates/Commodities: 10-Year Treasury yield +4 basis points to 2.04%, WTI crude oil -1.3%, COMEX gold: -1.3%
In a holiday-shortened week due to the observance of Independence Day, stocks posted yet another strong week of gains on the back of increasingly positive sentiment following the G20 Summit in Japan, pushing the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average to new all-time highs. On the economic front, the current economic expansion is now the longest on record at 121 months, surpassing the 1990s technology boom. Further evidence of a strong economy came by way of Friday’s nonfarm payrolls announcement, which showed the labor market bounced back from a weak May, adding 224 thousand jobs and far exceeding Bloomberg’s consensus estimate of 160 thousand. Employers have now added jobs for a record 105 straight months. “The June rebound in job growth highlights that one number doesn’t make a trend,” said LPL Research Chief Investment Strategist John Lynch. “In fact, it’s been seven years since job growth fell below 100 thousand for two consecutive months. Now, the question for markets in the near term with regard to the Fed is whether good news is good news or good news isn’t so good.”
Overseas, IMF managing director Christine Lagarde has been nominated to be the next president of the European Central Bank, though her appointment still needs to be confirmed by European Parliament. Her nomination sets her up to be the first female head of European monetary policy. As a noted dove, market participants interpreted the news of her appointment as an indication of additional monetary stimulus to come for the Eurozone, as economic growth in the region continues to slow.
Turning to the week ahead, the economic docket is relatively uneventful, though a bevy of consumer and producer price data is slated for release, as the U.S., Germany, and China, are all set to report inflation numbers.
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