Headlines could have an important influence on the market this week with earnings season all but finished — pushing trade, tech, and the run-up to the back-on-again U.S.-North Korea summit to the forefront, Prudential’s Chief Market Strategist Quincy Krosby said Monday in her weekly “Connecting the Dots” outlook.
The market opened Monday looking to continue its recovery from last week’s lows. “On Friday we had very strong payroll numbers that brought unemployment down to 3.8 percent, something we haven’t seen since 2000,” Krosby said. “While wages moved higher, they didn’t gallop higher, suggesting that inflation isn’t taking hold. This was good news for Main Street, and very good news for Wall Street.”
Although analysts prefer to focus on company-specific fundamentals, with few earnings left to report, trade-related headlines will continue to consume much of the business news.
This week’s G-7 meeting in Quebec (June 8-9) should be considerably more trade-focused than previous summits. Last week the market fairly absorbed the tariffs leveled against other countries and on the U.S., but interactions between the U.S. and its allies at the summit will be closely watched for any signs of easing or increasing tensions.
“The G-7 meetings are usually considered pretty boring,” Krosby said. “The market doesn’t pay too much attention to it — this time, however, it could be very interesting and produce more fireworks than we’ve ever seen.”
Each year, Apple’s World-Wide Developers Conference is a much-anticipated event, as the tech sector hopes to learn what updates Apple has in store — and how these developments may impact the greater tech sector.
“Right now, rumors are focused on iOS 12 and ARKit 2.0, the latter associated with Apple’s push into augmented reality,” Krosby said.
The Business Roundtable will release its second-quarter CEO economic outlook survey on Tuesday. Of particular interest will be corporate America’s views on trade and tariffs. The CEOs will likely suggest the Trump administration’s tariffs aren’t conducive to a healthy business environment, Krosby said.
“According to many reports, while business owners accept the need for trade reciprocity, their own specific plans for expansion — including capital expenditures and hiring — are being placed on hold until there’s more clarity on trade issues, particularly with regard to the impact on pricing,” she said.
This week’s important economic data:
Monday: Factory Orders
Tuesday: ISM Non-Manufacturing Index; PMI Services Index; JOLTS (Job Openings and Labor Turnover Survey); Business Roundtable’s CEO Economic Survey
Wednesday: International Trade deficit report; Productivity and Costs (Q1)
Thursday: Consumer Credit
Read Quincy Krosby’s full Q2 Market Commentary: Regime Change.
The views and opinions are those of the author at the time of publication and are subject to change at any time due to market or economic conditions. This is solely for informational purposes. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.