Read the highlights of this week’s commentary from Helios:
- U.S. payroll growth slowed in June, with nonfarm payrolls rising by 206k, but job growth for the prior two months was revised downward by 111k. The unemployment rate ticked up to 4.1% (vs. 4.0% in May), the highest since November 2021, as more individuals entered the labor force. Based on this jobs report, investors are expecting the Federal Reserve to lower interest rates twice this year, with the first reduction likely in September.
- The U.S. ISM Services PMI has fallen into contraction at 48.8, down from 53.8 in May, mainly as consumers cut spending on non-essential services. Despite the onset of the summer travel season, there was a notable decline in spending on leisure activities. Both business activity and new orders within the service sector dropped into contraction for the first time since 2020 and 2022, respectively, signaling weaker future demand.
- Last week, the S&P 500 and Nasdaq reached new all-time highs, with the S&P 500 marking its 34th record this year, as market optimism grew over potential Fed rate cuts in 2024. Tech giants like Microsoft, Apple, Alphabet, Amazon, and Meta, each valued at over $1 trillion, saw their stocks climb by at least 1.2%, all reaching new record highs.
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