Wall Street Flat as Investors Eye Important Inflation Data
Two weeks ago, the US Bureau of Economic Analysis (BEA) announced a second consecutive quarter of negative growth, but stopped short of labelling this latest contraction as a recession.
Consequently, all eyes turned to the release of last Friday’s nonfarm payroll. If July’s job data came in worse than expected, the BEA may have had to reassess their stance.
It didn’t. US job growth surged in July, with 528,000 jobs added versus the 250,000 which had been forecast. This better-than-expected result lent credence to the BEA’s position and poured cold water on concerns that rising interest rates and high inflation were softening labour demand in the US.
July’s strong job data has consequently fuelled expectations that the Fed will press ahead with aggressively tackling inflation. Investors now await the latest inflation figures on Wednesday for an indication of the Fed’s next move, and traders should brace themselves for increased volatility in the US markets around its release.
Subsequently, although Wall Street opened higher on Monday, the markets remained mostly flat amidst increased caution from investors. The Dow Jones ground out a gain of 0.09% whilst the Nasdaq and S&P 500 both fell 0.10% and 0.12% respectively.
Green Stocks Receive a Boost
Despite the indecision on display in the major indices, many electric vehicle and renewable energy stocks posted gains yesterday, after the US Senate passed the climate, energy and health care bill over the weekend.
The bill, which allocates around $370 billion to reducing greenhouse gas emissions and investing in renewable energy sources, will now make its way to the House of Representatives for further approval. First Solar, Bloom Energy and Rivian Automotives were three stocks which benefitted from the news, ending the session with gains of 4.75%, 4.36% and 6.78% respectively.
Earnings Season Winds Down
Meanwhile, earnings season has entered its final stretch, with many of the big names having already released Q2 results. One to watch out for this week is Disney, who announce earnings after the market closes on Wednesday.
Disney has fallen more than 30% in the stock market this year and will therefore be hoping to give its investors something to cheer about come Wednesday evening. Unsurprisingly, given that Disney’s California theme park spent almost a third of the comparison quarter in 2021 closed, it is expected that revenue and earnings will jump year on year.
Perhaps more interesting to see will be Disney’s guidance for the remainder of the year. High inflation in the US is likely to see more consumers prioritise spending on essentials, which in turn will potentially affect all segments of Disney’s business.
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