Friday, July 1, 2016

Quite impressively, following a big unforced error in Great Britain, the likes of Wimbledon has never seen — Brexit — U.S. markets have more or less fully recovered a mere 3 trading days immediately after the 800-point (on the Dow) crater. Question is: what’s next?

Pre-open market futures aren’t giving much of an indication either way at this point — the Dow, Nasdaq and S&P 500 are all hovering around unched this morning. Yesterday’s Chicago PMI orders cranked up 7.5 points to 56.8 (a measure over 50 indicates growth; under 50 shows a loss) for June. This indicates strength in the Midwestern region going forward, as the jump is in advanced orders.

New orders for Chicago PMI have reached their highest levels in 7 quarters. Backlog orders haven’t been this high in more than 5 years.

Otherwise, the U.S. market indicators will come out later today, before our 3-day Independence Day weekend: ISM Manufacturing, Construction and June U.S. Auto sales numbers are all expected following the Friday market open. Will these results be actively traded on? Considering the vacation habits of a plurality of Americans, we may see this play out more convincingly in the holiday-shortened week beginning on Tuesday.

A week from today will be the June non-farm payroll report, which delivered a shockingly low 38K new jobs in the previous month’s read. But the ADP ((ADP Quick QuoteADP - Free Report) ) report which preceded the Friday jobs numbers was far more in-line with expectations. Do we expect a big correction for May/June? If so, and considering the Brexit recovery, does this put a near-term interest rate hike possibility from the Fed back on the table?

Likely we won’t be worrying about this until sometime next week. Have a great 4th of July holiday, everyone, and be careful — beer, sunshine and presidential politics discussions can be a dangerous mix!

Mark Vickery
Senior Editor