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Markets Tepid Ahead of This Week's Jobs Numbers

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We started the trading day buoyed by financial stocks — specifically large banks having just passed their most recent stress tests, now sharing the wealth with shareholders through improved dividend yields, some of which even doubled, and new share buyback programs. But this narrative seemed to fade as the day progressed; the self-policing against extreme valuations looks to remain intact.

The Dow still finished in the green, but only +0.02%, or 9 points. At its peak during regular trading today, it was up 185 points. The S&P 500 finished up +0.03% on the day, which is still good enough for yet another record closing high. Joining the index at new all-time high closing levels in the Nasdaq, +0.19% today, continuing its tremendous performance this June. The Russell 2000 showed small-caps lagging again today, -0.58%.

Summer months tend to bring along fewer mid-day headline stories that wrest the attention of market participants, but Moderna (MRNA - Free Report) rose more than 5% today on reports that its coronavirus vaccine shows signs of efficacy against variants of Covid-19, such as the Delta variant which has begun to ravage under-vaccinated segments of the U.S. population. Other reports seem to back this up; they say Covid vaccines may be giving patients immunization from the coronavirus for years, not months.

Consumer Confidence for June outpaced expectations this morning after the opening bell, coming in at 127.3, above the expected 118.7 as well as the upwardly revised 120.0 for May. This is the highest single-month increase in nearly a year and a half — since the pandemic began, basically — as durable items such as motor vehicles, appliances and even new and existing homes continue to see high demand, even in the face of increased pricing.

While it’s true we’re basically looking at summer hours in the market these days, with trading volume on the wane a bit — without much to galvanize a bullish or bearish direction — this ought to change tomorrow with a fresh look at monthly employment numbers. The Automatic Data Processing (ADP - Free Report) private-sector payrolls Wednesday morning are expected to yield 550K new filled job positions for June.

This would be a far cry from May’s terrific +978K new jobs, but also a mirror image of the Friday non-farm payroll expectations from the U.S. government, which saw just 559K new positions filled last month with 706K expected for June. These monthly jobs surveys often do not correlate in real time; over a longer view, we tend to see the same trends play out, however. Either way, between half a million and a million new jobs per month has got to be seen as a positive for the U.S. economy.

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