July’s employment situation report, typically released on the first Friday of August, has largely been a market disappointment over the last eighteen years. DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 have all declined a majority of the time. Average, historical performance on the day has been negative with Russell 2000 declining the most, off 0.54%. Nearly across-the-board strength in five of the last seven years has improved average performance as the prior eleven-year stretch was nearly all bearish.
Yesterday’s ADP private sector employment report showed 156k jobs were added in July. This was modestly better than the consensus estimate of 150k and the report also came with an upward revision to June’s number. This suggests that tomorrow’s employment situation report could be solid as well. Current estimates are looking for around 165k net new jobs being added in July and the unemployment rate is anticipated to decline to 3.6%.
Historically, the employment report has been an important data point that the Fed monitored closely. Tomorrow’s report is not likely to be all that important as what happens next in the trade dispute with China. The Fed gave the market a small cut and an early ending to quantitative tightening on Wednesday and the market failed to advance. And today the market responded harshly to the report of additional tariffs on China. It would appear what the market is really longing for is an end to trade turmoil with China.
As always, please use protective buy and sell stops when trading futures and options.
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