Global stocks were mostly higher and U.S. futures wavered on the Fourth of July. While it is set to be a quiet day in markets with American investors on vacation, recession risks and the Federal Reserve’s monetary policy pathway remain in focus.
Overseas, the pan-European Stoxx 600 gained 0.7% while Tokyo’s
U.S. stock trading is on pause today, but U.S. stock-index futures continue to change hands and were mostly lower. Futures for the
Dow Jones Industrial Average
slipped 200 points, or 0.6%, after the index ended last Friday 321 points higher at 31,097.
futures were 0.7% lower, with futures for the tech-stock-heavy
also 0.7% in the red.
Investors are proceeding cautiously into the second half of the year, after the first six months of 2022 marked the worst start to a year since 1970. The rout in stocks has pushed both the S&P 500 and Nasdaq into bear markets, down 20% and 30%, respectively, since early January.
At the heart of this recent selloff have been fears that the Fed and other central banks will be unable to avoid spurring a recession as a result of much tighter monetary policy. Facing the highest inflation in decades, the Fed has already moved aggressively to raise interest rates and is expected to continue doing so, risking plunging the U.S. into a slowdown by denting economic demand.
“Although it’ll likely be on the quieter side in markets today, we won’t be able to escape the near-term recession risks for very long,” said Jim Reid, a strategist at
“A big swing factor here could be employment and this week is jam packed with U.S. labor data.”
The week ahead holds the headline June U.S. nonfarm payrolls and unemployment report on Friday, with JOLTs job openings data on Wednesday and the ADP national employment report on Thursday playing supporting roles.
“Labor markets remain strong around the world and although this is a generally a lagging indicator, we think some kind of turn should occur before we can declare what is absolutely the inevitable dive into recession,” Reid said.
Minutes from the Fed’s June meeting, to be released on Wednesday, will also be in focus. The central bank raised interest rates by a mega-sized 75 basis points last month; the typical rate hike is 25 basis points.
Write to Jack Denton at [email protected]