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Weekly Market Insights: Mixed Week For Markets; Jobs On The Rise

Weekly Market Insights: Mixed Week For Markets; Jobs On The Rise

August 08, 2022
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Stocks turned in a mixed performance last week as investors struggled with headlines suggesting that the Fed was unlikely to soon ease up on its current monetary tightening policy.

The Standard & Poor’s 500 rose 0.36%, while the Dow Jones Industrial Average slipped 0.13%. The Nasdaq Composite index picked up 2.15% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 0.23%. 1,2,3


Showing Resilience

Ahead of Friday’s employment report, stocks were generally higher, highlighted by a Wednesday rally triggered by fresh earnings surprises and a better-than-expected economic report. The rally was especially notable because it occurred when multiple Fed officials said that the fight against inflation hadn’t ended, perhaps throwing cold water on the idea that the Fed might pivot due to weakening economic activity and the prospect of cooling inflation.

Aside from this single day of enthusiasm, markets were a bit jittery, especially as investors monitored Speaker of the House Pelosi’s visit to Taiwan. A robust employment report on Friday reinforced the idea that the Fed would likely stay the course on monetary tightening, resulting in a mixed market for the week.


Employment Report 

The U.S economy added 528,000 jobs in July, doubling the consensus expectation of 258,000. The unemployment rate ticked lower, falling from 3.6% to 3.5%. Coincident with this job creation was strong wage growth, as average hourly earnings rose 0.5% in July and 5.2% from a year ago. 4

Leisure and hospitality, professional and business services, and healthcare lead the way in reported job gains, as seen in most sectors of the economy. Even sectors such as construction, particularly vulnerable to rising interest rates, saw job gains. The labor force participation rate moved slightly lower, slipping to 62.1%--its lowest level this year. 5


My Take: Sometimes the Bond Market is Wrong

For the last month or so, mortgage rates have been trending down. 

Why? Because the bond market got a bit ahead of itself and started to assume that the Fed would soon stop raising interest rates soon. Some media prognosticators even proclaimed the Fed would start cutting next year.

As I discussed last week, we are not in a recession. Another fact I could have mentioned then was that first quarter growth numbers are often the lowest of the year simply due to the end of holiday spending. Nonetheless, some bond market participants thought (still think probably) we are in a recession and that led them to drive rates down.

These employment figures should convince enough of them that there are still a lot of rate increases to come before growth is slowed enough to slow inflation. I am not changing my investments in response to this prediction, but I do suspect that mortgage rates and other interest rates will resume their upward march in the short run, which will likely cause a pause in the stock market's recovery.

This Week: Key Economic Data

Wednesday: Consumer Price Index (CPI). Institute for Supply Management (ISM) Services Index. Factory Orders.

Thursday: Jobless Claims. Producer Price Index (PPI).

Friday: Consumer Sentiment.

Source: Econoday, August 5, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Monday: Dominion Energy, Inc. (D), Tyson Foods, Inc. (TSN).

Tuesday: Emerson Electric Co. (EMR).

Wednesday: The Walt Disney Company (DIS).

Thursday: Illumina, Inc. (ILMN).

Source: Zacks, August 5, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

"People always call it luck when you've acted more sensibly than they have."

– Anne Tyler

The IRS May Send You One of Two Notices If Your Filed Returns Don’t Match Their Records

Have you wondered what happens if the information on your tax return doesn’t match the IRS records? The IRS mails out two notices, CP2100 and CP2100A, to banks, credit unions, businesses, and payers that may have made a mistake on their return.

The IRS mails these notices out twice a year, in September/October and April of the following year. Payers may receive a notice if their return is missing a Taxpayer Identification number, has an incorrect name, or both. The notices also tell payers that they are responsible for backup withholding. 

* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov6

This Cognitive Behavioral Exercise Can Help Quiet Your Negative Self-Talk

We all have that little negative voice in our head, and one of the ways to combat it is to change the way you think about situations. Stressful things will always happen, but the goal is to change your feelings about those stressful situations.

To practice this exercise, separate a piece of paper into three columns. One is for your negative thought, one is for the cognitive distortion at play, and one is for your rational response (thinking logically about how you’re feeling). Here’s an example:

Negative thought: I did horrible on my presentation today and am getting fired. 
Cognitive distortion: All or nothing thinking, jumping to conclusions
Rational response: Maybe it wasn’t my best presentation, but overall the quality of my work is good

These cognitive exercises take a lot of practice but can help silence your inner critic.

Tip adapted from Healthline7

Just two U.S. states have capital cities whose names include the full name of the state. What states are they?

Last week’s riddle: A rain gauge collects rainfall each day of a wet week beginning on Monday. Every day, the amount of rain in the gauge doubles. At Sunday’s end, the rain gauge is completely filled. So on which day is it half-filled?  Riddle answer: The rain gauge is half-full on Saturday and the amount of rain in the gauge doubles on Sunday so it becomes completely filled.

Bernina Express, Landwasser Viaduct, Graubünden, Switzerland

Footnotes and Sources


1. The Wall Street Journal, August 5, 2022

2. The Wall Street Journal, August 5, 2022

3. The Wall Street Journal, August 5, 2022

4. CNBC, August 5, 2022

5. CNBC, August 5, 2022

6. IRS.gov, May 2, 2022

7. Healthline.com, May 26, 2022


Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

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