Following the long holiday weekend, the market mellowed last week as people got back to work. On Friday, the jobs report came out and new job creation was slightly lower than forecasted, which is what the Fed would like to see to help tame inflation.
Inflation, or lack of it, will be front and center this week as two important reports are released mid-week, which will likely move the markets. There’s a 12-to-18-month lag between interest rate hikes and how they trickle through the economy. Rate hikes began in March of 2022 and increased at a fast pace beginning last June. Their effects may begin to show up in a bigger way in the coming inflation and job reports. Earning season also begins later this week, starting with some major banks reporting. The majority of companies will be reporting through the end of July and into August. At the same time, the federal reserve meeting will wrap up on July 26th with another possible rate hike forecasted.
Stock market momentum was to the upside in June and the next few weeks will test the rally’s strength. A continued reduction for inflation and stable earnings could propel it forward but any negative information could once again spook investors and temporarily derail the rally. I see any type of market pullback as a good time to make contributions, invest extra cash, and build up your portfolio. Making contributions while the market is down and stocks are cheap is the best way to achieve superior returns.
Photograph by: Tom Parkes on Unsplash
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