Investors Wait For CPI and Start of Earnings This Week (Premium Edition)

Increased fears of a recession caused the financial markets to undergo another wild week. However, many indexes recorded some slight gains due to investor bargain hunting and China's economic rebound. Overall, Wall Street had a good week, but equities remain bearish.

Last Friday, the Labor Department reported that nonfarm payrolls increased by 372,000 last month after rising by 390,000 in May. This is far more than the 265,000 jobs predicted by the Bloomberg consensus estimate.

The report caused mixed feelings among investors because it might support the Fed's case for accelerated rate hikes.

At 3.6 percent, the unemployment rate remained close to pre-pandemic lows, and average hourly earnings rose for the third consecutive month. According to the data, The Fed may read that the labor market and economy are robust.

Thus the Fed can make more drastic rate increases to combat inflation, even though traders may not welcome this. It indicates a chance of a soft landing for the economy which has not historically happened. What is more likely is a larger recession.

KEY MARKET DRIVERS & CALENDAR

Rising Inflation, Recession & Stagflation Fears Wednesday, July 13 – Core CPI (MoM) (June)Friday, July 15 – Retail Sales (MoM) (June)

This week is the beginning of the earnings season and CPI; thus, volatility is anticipated to persist.

On Tuesday, the NFIB small-business index for June will be released. May saw a decline in small company optimism, mostly due to inflation and a tight labor market raising salaries.

The June Consumer Price Index, which is related to inflation, is coming on Wednesday. May saw the highest annual inflation rate since December 1981, up 8.6 percent. The most recent reading of core inflation, which excludes food and energy, increased by 6% and was also more than predicted. The Federal Budget and Beige Book will be public in the afternoon.

The second quarter's Chinese growth will be a worldwide discussion topic because the first estimate will be released on Friday. China's atmosphere is becoming agitated. Some of the recent bad news appears to have been absorbed by the market. It no longer excludes the notion that tight monetary controls could reduce inflation without seriously harming the economy.

In this regard, the tendency has been backed by the Chinese government's stimulus programs, which encourage local governments to spend in particular. Additionally, there have been speculations that the US may lower its tariffs on specific Chinese goods. But these haven't yet received any attention.

S&P 500 SECTORS

Tip: Use this section to know various sectors' performance, and weight portfolios,...

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