Hope you are all doing well. Continued positive momentum for quarterly earnings pushed the S&P 500 and Dow to record highs. The S&P was up 3.6% for the week, and the Dow gained 3.0%. The NASDAQ surged 5.2%, although it remained 1.5% shy of the historic peak it reached more than two months earlier. The Real Housewives television franchise celebrated its 20th year this week. I have broken down this week’s update using quotes from the Real Housewives of New Jersey.
When I called you garbage, I meant that you were garbage. — Caroline Manzo
Friday’s monthly labor market report was garbage. It showed a decline of 23,000 jobs in July. That is well below consensus forecasts for a gain of around 90,000. Furthermore, the initial growth estimates for May and June were scaled back by a combined 103,000 jobs. Factoring in the latest figures, the three-month average fell to 20,000 jobs created per month. That is a sharp turnaround from March, when the economy added 214,000. While it looks alarming on the surface. It is not as bad as it seems. The overall unemployment actually ticked down to 4.1%. We are in a low-hire environment, which aligns with slower workforce growth from an aging population and reduced net migration. This means fewer jobs are needed to keep the labor market stable.
I’m relaxed. I’m calm and cool like a whistle. — Teresa Giudice
Leading into earnings season, there was a lot of anxiety about whether companies would be able to keep up their torrid earnings growth. That anxiety is fading, and calm has returned over the past two weeks as profits continued to improve. Earnings season entered its final stretch, with analysts now expecting the strongest growth rate since the second quarter of 2021. Net income is expected to rise an average of 50.4% for companies in the S&P 500, based on reports already released as of Friday. The reported numbers have far exceeded the projected earnings growth rate heading into earnings reports at the end of June, which was just 23.1%. Don’t be surprised if the market drops over the next couple of months. Even though the numbers have been great, it is normal and healthy for the market to have pullbacks. Any pullback should be viewed as a buying opportunity or a chance to convert to Roth.
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