Midyear Recap: After H1’s Strength, Focus on Employment Data & Fed‘s Minutes This Week

1. MAJOR INDEXES RETURNS

• The major U.S. stock indexes regained the ground they had lost the previous week and then some, as generally positive economic data lifted the $S&P 500(.SPX)$ , the $NASDAQ(.IXIC)$ , and the $Dow Chemical(DOW)$ more than 2% each. For the $NASDAQ(.IXIC)$ , it was the ninth positive week out of the past ten.  

• The $S&P 500(.SPX)$ and the $NASDAQ(.IXIC)$ both gained nearly 7% to record their fourth positive month in a row. The Dow climbed nearly 5% and posted its best month since November 2022.

• U.S. stocks performed strongly in the first half of the year, with the $NASDAQ(.IXIC)$ rising 31.7%, the best first-half performance since 1983, and the $S&P 500(.SPX)$ rising 15.9%, the best first-half performance since 2019.

The market is concerned about the trend of U.S. stocks in the second half of the year, how it will be affected by the risk of a U.S. recession and whether the Federal Reserve will turn around and cut interest rates.

In the first week of July, the U.S. stock market only had a half-day market on Monday, and the market was closed for the whole day on Tuesday because of the U.S. Independence Day.

"With stocks already priced for the near perfection of a soft landing, we see better risk-reward in high-quality bonds over equities," the UBS analysts wrote.

Recommend to Read:

• H2 2023 Outlook | S&P 500 Sectors be Focused on & Points Forecast

• H2 2023 Outlooks | Reasons on Slow Bull vs. Bear of S&P 500

• First Half of 2023: Top 10 SG Stock & Best Performing Sectors

• 2023 H1 Recap | Top ASX Stocks & Sectors

2. SECTORS AND STOCKS OF $S&P 500(.SPX)$

• The first half of 2023 produced lopsided results across U.S. equity sectors. Through June 28, the information technology sector accounted for nearly 65% of the $S&P 500(.SPX)$ ’s year-to-date total net return, according to $DJIA(.DJI)$ . Across the other 10 sectors, consumer discretionary generated about 20% of the broad market’s return and communication services added 18%; other sectors were either modestly positive or negative.

• The tech-heavy Nasdaq has stolen the show in the first half, on track for a gain of more than 29% - the biggest such gain in 40 years.

• The top 10 winners of $S&P 500(.SPX)$ are $NVIDIA Corp(NVDA)$ $Meta Platforms, Inc.(META)$ $Tesla Motors(TSLA)$ $Palo Alto Networks(PANW)$ $Advanced Micro Devices(AMD)$ $Salesforce.com(CRM)$ $Amazon.com(AMZN)$ $Broadcom(AVGO)$ $Fortinet(FTNT)$ $Chipotle Mexican Grill(CMG)$

3. MACRO FACTORS FOR JULY

Inflation moderation:

• The U.S. Federal Reserve’s preferred gauge for tracking inflation showed that consumer prices rose in May at the slowest monthly pace in two years. The Personal Consumption Expenditures Price Index rose at a 3.8% annual rate, down from a revised 4.3% figure in April. Excluding volatile food and energy prices, core inflation rose 4.6% in May versus 4.7% in April. 

Upward adjustment

• A revised estimate of the U.S. economy’s growth in this year’s first quarter showed a markedly stronger result than an earlier report. Gross domestic product increased at a 2.0% annualized pace, up from the previous estimate of 1.3%, largely because consumer spending and exports were stronger than estimated previously.

Yields climb

• Yields of U.S. government bonds rose, ending what had been a mostly quiet stretch for fixed income in June. The yield of the 10-year U.S. Treasury bond closed at 3.81% on last Friday, up from 3.74% at the end of the previous week. As recently as early April, the yield had been as low as 3.29%. 

Market calm

• $Cboe Volatility Index(VIX)$ , snapping a string of five weekly declines in a row. On last Friday, the VIX closed at 13.6—just above its level before the start of the COVID-19 pandemic and down 32% from a recent high on May 24.

4. THE WEEK AHEAD : JULY 3-7

A monthly U.S. labor market update due out on Friday will show whether unexpectedly strong recent job growth extended into June.

Monday

• Institute for Supply Management’s manufacturing index

• Construction spending, U.S. Census Bureau

• Early U.S. financial market preholiday closures: 1:00 P.M. for stock market, 2:00 P.M. for bond market    

Tuesday

• Independence Day holiday, U.S. financial markets closed 

• New home sales, U.S. Census Bureau 

Wednesday

• Release of minutes from the June 13–14 meeting of the U.S. Federal Reserve Board

• ADP National Employment Report, ADP

• Factory orders, U.S. Census Bureau

Thursday

• Institute for Supply Management’s nonmanufacturing index

• Job Openings and Labor Turnover Survey, U.S. Bureau of Labor Statistics

• Trade balance, U.S. Census Bureau

• Weekly unemployment claims, U.S. Department of Labor

Friday

• Jobs and unemployment, U.S. Bureau of Labor Statistics 

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Any special focus？

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