The S&P 500 Index ($SPX) (SPY) today is up +0.11%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.02%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.24%. September E-mini S&P futures (ESU25) are up +0.12%, and September E-mini Nasdaq futures (NQU25) are up +0.29%.
Stock indexes are climbing today on signs of resilience in the US economy. The labor market remains healthy after the July ADP employment change rose more than expected and posted its largest increase in four months. Also, economic activity rebounded after Q2 GDP expanded more than expected. Gains in stocks are limited as the markets are awaiting the result of today’s FOMC meeting and post-meeting comments from Fed Chair Powell. Also, Microsoft and Meta Platforms are set to release their earnings after today’s close.
The US July ADP employment change rose +104,000, stronger than expectations of +76,000 and the largest increase in four months. Also, the Jun ADP employment change was revised upward to -23,000 from the previously reported -33,000.
US Q2 GDP rose +3.0% (q/q annualized), stronger than expectations of +2.6%. The Q2 core PCE price index rose +2.5% q/q, stronger than expectations of +2.3% q/q.
US MBA mortgage applications fell -3.8% in the week ending July 25 with the purchase mortgage sub-index down -5.8% and the refinancing sub-index down -1.1%. The average 30-year fixed rate mortgage fell -1 bp to 6.83% from 6.84% in the prior week.
The Treasury said in its quarterly refunding announcement that it anticipates keeping the size of its note and bond auctions unchanged “for at least the next several quarters,” and will rely more on the shortest-dated securities to fund the federal deficit at least until 2026.
In the latest tariff news, President Trump today said he will impose a tariff rate of 25% on India starting August 1 and suggested he would add an additional penalty over the country’s energy purchases from Russia.
The markets this week will focus on any news of new trade deals before Friday’s deadline. The Fed is expected to keep the fed funds target range unchanged at 4.25% to 4.50% when the FOMC meeting ends later today. On Thursday, initial weekly unemployment claims are expected to rise by 6,000 to 223,000, and the Q2 employment cost index is expected to increase by 0.8%. Also, Jun personal spending is expected to climb +0.4% m/m and Jun personal income is expected to rise +0.2% m/m. In addition, the Jun core PCE price index, the Fed’s preferred inflation gauge, is expected to climb +0.3% m/m and +2.7% y/y. Finally, on Thursday, the Jul MNI Chicago PMI is expected to increase by +1.6 to 42.0. On Friday, Jul nonfarm payrolls are expected to increase by +109,000 and the Jul unemployment rate is expected to rise by +0.1 to 4.2%. Also, Jul average hourly earnings are expected +0.3% m/m and +3.8% y/y. In addition, the Jul ISM manufacturing index is expected to increase by +0.2 to 49.5. Finally, the University of Michigan Jul consumer sentiment index is expected to be unrevised at 61.8.
