DAILY INSIGHTS
Stocks set to open slightly lower. The S&P 500 Index is going for its fifth straight positive session today, while the Nasdaq will try to make it seven in a row. Today, market participants will focus on the latest jobs data and stimulus headlines out of Washington, DC, as the August congressional recess and Republicans’ August 7 deadline approaches. European markets are down more than their US counterparts in midday trading. Asian markets were flat overall. China’s Shanghai Composite rose 0.3%, Japan’s Nikkei lost 0.4%, and Hong Kong’s Hang Seng slipped 0.7%.
Unexpected drop in jobless claims. Filings for initial jobless claims came in lower than expected at 1.19 million for the week ending August 1, a sizable drop from more than 1.4 million the prior week. Continuing claims also delivered solid improvement, dropping from 17 million to 16.1 million for the week ending July 25, but may have been suppressed by data collection issues (source: US Bureau of Labor Statistics). The plateau in claims continue to point to a long road back for the job market recovery, a road that may get longer if Washington can’t agree on an extension to supplemental benefits.
Global economic recovery continued in July. Global Purchasing Managers’ Index (PMI) for both manufacturing and services returned to expansionary territory (above 50) for the first time since January 2020 according to JPMorgan index data. The rebound from sub-30 levels since March amid the pandemic is impressive, while the breadth of the recovery across Europe, Asia, and the United States is encouraging.
ISM data suggests recovery in the United States continued in July. We’ve written quite a bit lately about the deterioration in high-frequency data. This week’s data from the Institute for Supply Management (ISM), however, suggested the economic recovery remained very much intact last month, as we discuss later today on the LPL Research blog.
COVID-19 news. A 20.3% drop in tests from the prior week deflated case numbers, but the 25.4% weekly drop to just under 53,000 new daily cases is still encouraging (source: Johns Hopkins). Hospitalizations continued to trend lower, but the positive test rate of 7.9% over the past week is disconcerting; seven states, including Florida and Texas, have positive test rates above 15%.
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